Flipkart bets big on grocery segment, plans to scale service across India

Betting big on grocery segment, Flipkart is planning to scale its service across India, including tier-II and-III cities, in the next five years. Currently, the Walmart-owned firm delivers groceries in five cities, including Mumbai, Bengaluru, Chennai, Hyderabad and Delhi NCR, through Flipkart Supermart, its online grocery store initiative. 

“Grocery is presently a $400-billion market, being the biggest part of the overall retail segment in India, though the penetration of online grocery is just 1 per cent. I expect grocery to be one of our top categories in the next 3-5 years,” said Manish Kumar, vice-president for groceries at Flipkart. 

Flipkart is not leaving any stone unturned, including building a dedicated supply chain, setting up fulfilment centres as well as providing unique shopping experiences to customers. With expansion of internet connectivity and initial success of the model, there are several players such as Amazon, bigbasket, Grofers, Swiggy and even Google-backed Dunzo are trying to establish their foothold in this space.  Through Flipkart Supermart, Flipkart offers fast-moving consumer goods and dairy products. The company is also running a pilot to offer short-shelf life products such as fruits and vegetables using a farm-to-fork model.

Aryaman Tandon, director at management consulting firm Praxis Global Alliance, said e-commerce companies in the country were heavily making investments to crack the online grocery supply chain model wherein the private label is a big driver of economics. “Big players already have 30-40 per cent private label penetration. They are doing this for items such as fruits and vegetables, meat, cereals and kitchen and cleaning products,” Tandon said. 

Unlike bigbasket, which follows an inventory-based model, Flipkart runs a marketplace for groceries. The firm is collaborating with farmers, sellers, producer organisations and local micro, small and medium enterprises to create a sustainable ecosystem. Rajneesh Kumar, chief corporate affairs officer at Flipkart, said the online grocery business was a critical lever for the company to connect with millions of Indians and bring them into the e-commerce fold. “Our investments in grocery business allow us to contribute to developing farm infrastructure and supply chain capabilities, generate thousands of jobs, and support local farmer groups and producers by providing national market access for their products,” said Rajneesh Kumar.

The company is setting up a separate supply chain for groceries, which includes fulfilment centres and a last-mile delivery network that is custom-designed to solve some of the unique challenges that each city or town poses. 

The company is also building various consumer experiences such as buying groceries using voice and predicting customer shopping behaviour to offer personalised items.

Flipkart Supermart is the company’s second attempt in online groceries. The earlier pilot was a hyperlocal service that helped Flipkart identify some critical problems in the space, such as ‘fill-rate’, and innovate from the ground up to solve those problems and enhance customer experience. After a 5-month long pilot with Flipkart employees, Supermart was launched in Bengaluru in November 2017.  It promises free delivery on orders above Rs  600 and also Rs  1 deals — a concept pioneered by the company.