Grocery takes centre stage: Flipkart closes in on Bigbasket, Grofers

As grocery becomes the new frontier for battle among e-commerce heavyweights in India, Flipkart is learnt to have adopted a targeted strategy to first win two major markets — Bengaluru and the National Capital Region (NCR) — before taking the battle to other cities. Presently, home-grown online grocers, Bigbasket and Grofers are the dominant players in Bengaluru and NCR, respectively.
 
According to sources privy to internal discussions, Flipkart Supermart, the online grocery store Flipkart launched in August 2018, has already hit a monthly sales run-rate of Rs 50 crore — a target initially set for March 2019. The unit now ships between 10,000 and 15,000 orders a day, with an average order value of Rs 1,100. “The message from the top management is that we need to be No. 1 in Bengaluru and Delhi by the year-end,” said a source in the know. A decision on whether to scale up in existing cities or enter in newer ones would be taken following a performance review in June.
 
Though Flipkart’s grocery revenues are a fraction of Bigbasket’s Rs 500-crore monthly sales, and less than Grofers’ Rs 150-crore monthly run-rate, the Walmart-backed company is pushing hard in the category with better discounts, and luring millions of users on the company’s main e-commerce site.
 
“This segment had the highest burn, across categories, in the last quarter,” a source said. The investments are largely going towards funding the discounts and advertising campaigns.

 
Initially launched in Bengaluru, Flipkart Supermart expanded to Hyderabad and Chennai in June, and Delhi-NCR in October last year. Work is underway to launch the service in Mumbai, which will go live in February, sources said. In Hyderabad, Flipkart is currently running a pilot for Flipkart Fresh, its fruit and vegetables delivery service, and delivering about 200 orders a day, currently.
 
Groceries, fast-moving consumer goods, and daily kitchen supplies — loosely called the ‘grocery segment’ — may not give the best top line, but offer customer stickiness.
 
As the first mover, Bigbasket, which has already marked its presence in 28 cities, has established itself as the largest player in the space. But as Flipkart and Amazon started closing in on the segment, Bigbasket reportedly held discussions for a merger with Grofers and Amazon in 2017.
 
However, subsequently, it received a large investment from Alibaba Group Corp. Alibaba is a major investor in Paytm and Paytm Mall, and as part of the deal, the two platforms (Bigbasket and Paytm) are building out synergies between them.
 
Grofers, on the other hand, is said to be struggling. After early investments from Sequoia Capital and Tiger Global Management, and rapid expansion, the Gurugram-based start-up had to scale back operations in 2014. It even saw a 20 per cent dip in valuation when SoftBank reinvested in the company in March last year.
 
The biggest threat to Flipkart is from Amazon — in grocery as well as in all other segments. Though the newest entrant in the segment, Amazon Prime Now is rapidly expanding its reach. Besides an aggressive online push, Amazon India has also inked a deal with Future Retail to acquire its supermarket chain More. Once completed, the deal will give ample stocking and supply chain infrastructure to the e-commerce biggie.
 
 
Grocery takes centre stage

• Flipkart Supermart now clocking Rs 50 crore sales, eyeing pole position in Delhi and Bengaluru
• Company investment in grocery highest across categories
• Grocery devision is led by Flipkart  Vice-president Manish Kumar