Ecommerce giant Flipkart is now gearing up to go strong into the burgeoning online grocery industry. Despite the entry of Amazon in the grocery space last year, Flipkart has not stepped on the accelerator when it comes to this vertical. With a bigger challenger — Reliance JioMart — on the horizon now, the Walmart-owned marketplace looks to have ramped up its grocery plans on priority, starting with a pilot in Hyderabad.
The company had been waiting to complete its internal processes before applying for a food retail permit. An ET report citing people aware of the development said that Flipkart has started a pilot project in Hyderabad to deliver fresh fruits and vegetables in partnership with its vendors. The delivery business is being operated through Flipkart FarmerMart, the company’s food retail arm, which will enable Flipkart to control the food inventory in line with the government’s FDI policy.
The report added that previously Flipkart has stayed away from fresh fruits, vegetables and grocery delivery, due to the complexity of the supply chain and regulatory compliances. However, with Reliance’s JioMart and Amazon’s emphasis on Prime Now, the company is not willing to ignore this segment now. Interestingly, Flipkart is expected to leverage its recent investment in agritech startup, Ninjacart. Hence, it is being speculated that a part of Flipkart’s food retail supply chain for its partners will be powered by Ninjacart in future.
For the pilot, Flipkart has partnered with Waycool Foods & Products as well as other sellers to launch operations.
Kalyan Krishnamurthy, CEO, Flipkart Group, had said at the time of the acquisition that building a successful Flipkart Supermart means creating the right infrastructure, supporting local farmers, producers and food processors, and building sustainability into the ecosystem.
Due to food retail norms, Flipkart’s food license is unlikely to be merged with Flipkart’s SuperMart business, which is run like a marketplace and handles delivery of groceries, fresh produce and other daily essentials. The company has taken SuperMart to five cities this year; it launched Flipkart Supermart in Mumbai in May, following the launch in Bengaluru, Chennai, Hyderabad and Delhi.
The company’s rival Amazon already has committed to invest $500 Mn over five years to sell third-party and its own private-label food products. It’s also entering the food delivery sector and has launched a two-hour delivery service for fresh fruits and vegetables through Amazon Prime Now.
With Reliance’s entry into the online grocery delivery market, the competition has become more intense for unicorns such as Grofers and BigBasket, who are currently working on their path to profitability as well as for the well-funded ecommerce giants.