In its bid to set its foot firm in the soon-to-be USD 10.5 billion online food and grocery market in India, Walmart-owned Flipkart is playing catch-up with American retail giant Amazon and Alibaba-backed Bigbasket in fresh fruits and vegetable delivery space.
According to the local media Economic Times (ET), Flipkart has partnered with vendors on its marketplace to deliver fresh fruits and vegetables in Hyderabad.
“Even though Flipkart (in the past) has steered away from venturing into the fresh fruits and vegetable space directly, given the complexity of the business’ supply chain and regulatory compliances, with the entrance and aggressive push by its largest competitors, Amazon.com and Reliance Industries, it is no longer a segment that can be ignored,” a top executive at Flipkart told ET.
Flipkart has also applied for a food retail license which will allow the company to own food inventory. With the permit, Flipkart plans to open physical stores for groceries and fresh food later this year, similar to what Softbank-backed e-grocer Grofers is doing.
On the new year’s eve, Reliance rolled out JioMart in parts of Mumbai focussing on high-consumption categories first including grocery, staples, and other household products such as shampoos and soaps.
While Flipkart is trying to get an edge over the Indian giant in fresh fruits and vegetable space, it faces a bigger challenge from Bigbasket and Amazon Now, both of which have now an extensive presence in the segment. Amazon already sells fruits and vegetables through Amazon Now with the two-hour delivery feature. Additionally, it also owns stakes in Aditya Birla Group’s food and grocery retail chain More and Kishore Future Retail which runs supermarket chain Big Bazaar.
The ET report said Indians spend USD 500 billion in fresh food retailing space. Another recent report by RedSeer expects the food and grocery market in India to touch USD 880 billion by 2023.
In December 2019, Flipkart had begun building its delivery and supply-chain muscle for its e-grocery business. It invested USD 60 million in Bengaluru-based hyperlocal delivery startup Shadowfax and an undisclosed amount in fresh produce supply chain startup Ninjakart along with its parent company, Walmart.
While Shadowfax’s investment was aimed at making faster same-day deliveries to boost its grocery platform Supermart, it seeks to leverage Ninjakart to source fresh produce directly from farmers. Ninjakart connects farmers to retailers through its network of warehouses, fulfillment centers, and collection centers.
Launched in May 2018, Supermart is Flipkart’s second attempt at grocery delivery after it shut down Nearby—its initial product for grocery delivery—in 2016. Since late last year, Flipkart has stepped on the gas with aggressive promotional offers including selling household items at INR 1 (less than a US dollar). Present in five cities across the country – the National Capital Region, Bengaluru, Mumbai, Chennai, and Hyderabad – Supermart is now adding fresh fruits and vegetable delivery in its kitty in order to tap recurring demand from consumers.
“With its investment in Ninjacart, Supermart will now look to expand its presence over the next 18 months, the ET report said.
