India’s largest online retailer Flipkart will make a second attempt at selling groceries even as its American rival Amazon.com Inc. scales up its staples and household products category to grab a bigger slice of the $250-billion market.
Flipkart will roll out grocery services in the first week of August, two people familiar with the development told BloombergQuint requesting anonymity as the details are private. The e-commerce giant will start a pilot in Bengaluru with daily essentials and later add dairy and fresh produce, the first person said.
Flipkart largely depends on mobile phones and large appliances for sales and is looking to convert its users into frequent transacting customers. Like Amazon’s Pantry program, Flipkart will start with the scheduled delivery of groceries with competitive pricing, the person said.
Amazon has been expanding its online food and grocery sales. Consumables and consumer goods account for a third of its orders placed in India. The Seattle-based e-tailer is also in preliminary talks to buy BigBasket, India’s largest online grocer that operates in about 25 cities, according to a Bloomberg report.
Food and grocery contributed 42 percent to India’s $600-billion retail market in 2015, according to the India Brand Equity Foundation, a government-backed researcher and think tank. It expects the retail market hit $1 trillion by 2020.
Flipkart’s Chief Executive Officer Kalyan Krishnamurthy had said in April that the company will get into grocery as 80 percent of units bought in India is grocery. The online retailer had launched an ordering app called Nearby to deliver fruits, vegetables, soaps and other staples from supermarkets to customers in October 2015. However, it shut the business a few months later after receiving a poor response.
What’s Different This Time
Flipkart had piloted on-demand delivery of grocery and staples from nearby supermarkets and stores two years ago. This time, the e-tailer will start with an inventory-led business where it will source products from sellers and brands and follow a scheduled delivery model, similar to BigBasket and Amazon Pantry, the second person quoted above said.
Flipkart declined to comment on BloombergQuint’s queries regarding its second grocery foray.
Meanwhile, the company’s ongoing talks to acquire its smaller rival Snapdeal hit a block as Wipro’s Azim Premji has objected to payments to some shareholders, including Snapdeal’s two founders, Bloomberg reported last week citing people familiar with the matter
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