As the next phase of retail and ecommerce plays out in the online-to-offline model, Walmart-owned Flipkart is looking to expand the offline reach, as well as boost its grocery delivery business. A report today (May 1) says that Flipkart is in talks with Bengaluru-based grocery chain Namdhari Fresh.
A CNBC TV18 report cited sources to say that Walmart has held talks with Namdhari, but the acquisition will be made through Flipkart. However, the contours of the deal are still being worked out.
The report further said that Walmart is keen to get into businesses with strong agri-supply chain and Namdhari’s sourcing from farmers is a key area of focus in the talks.
Founded in 2000 by Namdhari Seeds, Namdhari Fresh has more than 30 stores in Bengaluru. The chain operates in the premium green grocers segment, offering groceries, fruits and vegetables to retail customers.
Inc42‘s email query sent to Flipkart didn’t elicit an response till the time of publication.
Flipkart: Getting Ammunition For Grocery War
The Walmart-owned ecommerce company has been pushing into the grocery segment for the past couple of years. Inc42 had earlier reported that Flipkart is also building a dedicated supply chain for this category under Supermart.
Earlier, in April 2017, CEO Kalyan Krishnamurthy, while speaking at an event organised by TiE Delhi NCR, had said, “Eighty percent of the units bought in India are in the groceries segment. The grocery market is almost as big as $400 Mn-$600 Mn, so we will have to get into it.”
In May 2018, reports surfaced that Flipkart’s grocery operations would expand to Hyderabad, followed by Chennai, Mumbai, Delhi-NCR, and Pune. Flipkart had plans to explore the ‘fresh’ category i.e fruits and vegetables, in Bengaluru, where it launched grocery services last year.
It also planned to offer steep price cuts on groceries at the beginning and end of each month, similar to the offers made by Amazon India and BigBasket, with discounts of 25-50% on groceries.
The deal with Walmart was expected to enable Flipkart to build a large food and grocery business as it will be able to procure groceries and consumer goods directly from Walmart’s wholesale stores.
Online Grocery Market In India
According to a Goldman Sachs report, the Indian online grocery market is estimated to reach $40 Mn (INR 270 Cr) by FY19, growing at a CAGR of 62% from 2016 to 2022.
Here’s a look at the recent happenings in the space:
- Cab-hailing company Ola was speculated to leverage its 125K food delivery riders from its food delivery unit, Foodpanda, for grocery fulfilment.
- Gurugram-based online grocery startup Grofers raised nearly $60 Mn in a fresh Series F funding round from Masayoshi Son-led Softbank Vision Fund
- Bengaluru-based hyperlocal startup BigBasket is close to completing its $150 Mn funding round with sizable investments from Chinese ecommerce giant Alibaba, South Korean Mirae Asset Global Investments and the UK government-backed CDC Group.
- Amazon acquired majority stake in Aditya Birla’s retail chain More
Morgan Stanley expects the online food and grocery segment to become the fastest-growing segments in India, expanding at a CAGR of 141% by 2020 and contributing $15 Bn or 12.5% of overall online retail sales.