India: Flipkart Supermart to take on Amazon, BigBasket in grocery space

Flipkart has launched its grocery offering called Flipkart Supermart in Bengaluru and plans to expand it to five to six other major cities by the end of the year. Graphic: Ipsita Ray/DEALSTREETASIA

India’s largest online retailer Flipkart Pvt. Ltd plans to rapidly expand its recently launched grocery business, throwing down the gauntlet to entities such as online grocery market leader BigBasket and arch-rival Amazon India Pvt. Ltd, as large online retailers look to bet big on a sector that is expected to rake in hundreds of crores of business in next few years.

To start with, Flipkart has launched its grocery offering called Flipkart Supermart in Bengaluru and plans to expand it to five to six other major cities by the end of the year. The company’s foray into the grocery business comes a little over two years after the e-commerce giant shut down its grocery app Nearby, which failed to take off.

“Grocery is the largest retail category but it’s not a solved problem from an e-commerce perspective,” Flipkart grocery head Manish Kumar said. “We have done three main things to solve this. First, grocery is a high-repeat category so we will offer everyday discounts. Second, we have a strong proposition of delivering quality. We will display expiry dates on each product and guarantee fresh products to customers. Third, through preferred delivery slots for customers, we have tried to solve for convenience from a customer experience point of view,” he said.

As part of its re-entry into the online grocery business, Flipkart will also sell staples and consumables under its own label, Flipkart Supermart Select. Flipkart is not launching a separate app for its grocery play, unlike arch-rival Amazon which sells consumer products through its Prime Now app.

Mint first reported in February 2017 that Flipkart chief executive Kalyan Krishnamurthy was betting big on groceries, hoping that sales of everyday household items would keep shoppers coming back to the company’s platform.

To lead the grocery initiative, Krishnamurthy had in December 2016 hired two old Flipkart hands, Kumar and Nitin Rajput, who had left the company in 2015 to launch their own startup. The online retailer has also built out a separate and extensive supply chain for the grocery business.

“Grocery is a category where you need a dedicated supply chain with separate fulfilment centres and a last-mile logistics network. Grocery requires dedicated handling of products and multiple product checks. Our offering is differentiated because we’ve built a different shopping experience on the same platform. The Supermart store is very similar to how customers shop in actual aisles. We also have a dedicated supply chain that other horizontal players may not have,” Kumar said.

So far, online grocery sales have taken off slowly. Market research firm RedSeer Consulting Pvt. Ltd estimated it to be barely $1 billion in 2017. Online retail grew 23% to $18 billion last year, up from $14.5 billion in gross merchandise value in 2016. Online grocery sales is seen by e-commerce firms as the next big battleground.

This article was first published on Livemint.com