After Amazon’s Amazon Now is tasting success in India, homegrown e-tailer Flipkart is looking at re-entering the grocery segment. This will be its second attempt at entering the groery segment after launching Nearby in 2015.
Speaking at a TiE event, Flipkart CEO Kalyan Krishnamurthy confirmed to PTI that it will enter the grocery segment. “80% of units bought in India is grocery... $400-600 million is grocery market, so we have to get into it," he said.
"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% of the market is the third one which is monthly basket where average is about over Rs 2,000. With those, it's a very sustainable business," he added.
Flipkart will also look at mergers with a focus on capabilities and no restriction on size. In the past, it has made some big-ticket acquisitions Jabong and Myntra. Reports also suggest that it is looking to acquire Snapdeal.
Flipkart launched Nearby back in October 2015 as a separate app to deliver fruits, vegetables, soaps and other staples from supermarkets to customers. But the business failed to take off and the ecommerce major shut the business a few months later.
Rival Amazon launched Amazon Now in India last year and is planning major investments to the tune of $500 million in e-retail of food products in India as per the PTI report. Amazon Now seems to be working for the ecommerce major and is now available in four cities Hyderabad Bengaluru, Delhi-NCR and Mumbai.
The online food and grocery segment has seen a mixed bag in terms of successes. While BigBasket and Grofers still operate in several markets players like LocalBanya have shut shop. PTI reports that as per industry reports, the online F&G delivery market is estimated to be around $600 million in India and is pegged to reach $5 billion by 2020.