Flipkart to expand e-grocery store to 5-6 Indian cities by year-end

E-commerce major Flipkart plans to expand its online grocery service 'Supermart' to 5-6 major Indian cities by the end of the year as it takes head-on players like Alibaba-backed BigBasket and SoftBank-funded Grofers as well as rival Amazon India.

The company plans to expand the service, which currently covers all major pin codes in Bengaluru, in 5-6 major cities by the end of 2018, Flipkart said in a statement.

The development comes a day after the Competition Commission stated that it has cleared US retail giant Walmart's proposal to acquire 77 per cent stake in Flipkart, a deal estimated to be worth USD 16 billion.

The deal, which was announced in May, will see significant shareholders like SoftBank Vision Fund, Naspers, venture fund Accel Partners and eBay exiting the Bengaluru-based company.

In its statement today, Flipkart said its groceries portfolio currently spans staples, FMCG and dairy products, and that the category can be accessed through its Android and iOS mobile apps, as well as its desktop and mobile websites.

Grocery segment accounts for a significant portion of the unorganised retail segment in the country. With people becoming comfortable buying even milk and bread online, the online grocery segment is projected to witness a strong growth over the next few years in India.

As per estimates, e-tail is just 0.5 per cent of the total grocery market in India, which is pegged at USD 400 billion, or 70 per cent of all retail.

"While the miniscule penetration is an indication of the scope for future growth, it is also reflective of the need for innovation in a category that has the highest potential to generate repeat business and ensure customer retention," Flipkart said.

This is Flipkart's second attempt at the segment. In October 2015, Flipkart had launched a separate groceries ordering app called Nearby for delivering fruits, vegetables and other staples from supermarkets to customers. However, following a weak response, Flipkart closed the business a few months later.

Interestingly, in May this year, Amazon India had re-branded its groceries service to 'Amazon Now'. It has been aggressively ramping up selection and focussing on speedier delivery to consolidate its position in the segment.

Prime Now, an app-only service, is available to customers in Bengaluru, Mumbai, New Delhi and Hyderabad.

Flipkart Head of Groceries Manish Kumar said grocery shopping remains an "unsolved e-commerce market", despite its importance to consumers and to the economy.

"With Flipkart Supermart we have solved for problems of assured quality, savings, and convenience to create an unmatched offering. The feedback has been phenomenal... We're now taking it wider and plan to expand our reach and scale rapidly over the coming months," he added.

The statement said Flipkart has set up a dedicated, cost-efficient supply chain that includes building a new warehouse and last-mile delivery network, and making open-box slotted deliveries for easy doorstep returns.

"...Flipkart Supermart offers bigger discounts compared to any store, delivery at doorstep at a preferred time slot, and products with freshness guarantee and Best Before Date' present for each product on the display page," it added.

Besides, Flipkart has also introduced 'Flipkart Supermart Select', its private label in staples categories (pulses, spices, dry fruits).