Locked in an intense battle with Amazon, homegrown e-commerce major Flipkart is looking at re-entering the grocery segment that accounts for a significant portion of India’s retail industry.
“Yes we will get into grocery… 80 per cent of units bought in India is grocery… US $400-US $600 million is grocery market, so we have to get into it,” CEO, Flipkart, Kalyan Krishnamurthy was quoted by PTI as saying.
According to the PTI report: This will be the second attempt into the grocery segment for the Bengaluru-based firm. In October 2015, Flipkart had launched a separate groceries ordering app called Nearby for delivering fruits, vegetables, soaps and other staples from supermarkets to customers. However, following a weak response, Flipkart closed the business a few months later.
Flipkart’s rival Amazon India has launched its grocery ordering app, Amazon Now last year. The app is now available in four Indian cities including Bengaluru, Delhi-NCR and Mumbai. Amazon plans to invest around US $500 million in e-retail of food products in India.
“There are three models for grocery. One is a daily purchase, the average selling price (ASP) there is very low at about Rs 300-400. Then there is a weekly business model, which is a bit higher. Thankfully, 60-70 per cent of the market is the third one which is monthly basket where average is about over Rs 2,000. With those, its a very sustainable business,” he said.
As per industry reports, the online F&G delivery market is estimated to be around US $600 million in India and pegged to touch US $5 billion by 2020.
Talking about acquisitions, Krishnamurthy said the company is looking at targets for enhancing capabilities.
“We will look at M&A, size doesn’t matter. What we are looking at is capabilities. A lot of business we acquired over time were actually small,” he said citing examples of PhonePe and Jeeves.