Post the entry of Amazon India into the e-grocery business with Amazon Now, home-grown e-tailor Flipkart is also looking at re-entering the e-grocery market, Kalyan Krishnamurthy, CEO, Flipkart,said on Friday. He was speaking at the India Internet Day conference, organised by TiE – an industry body for start-ups, in the Capital.
“With 80% of the units which are bought are grocery items, we will eventually enter the business. Also the size the grocery market is $400-600 million, we have to get into the business,” added Krishnamurthy.
He further explained that there are three models in the e-grocery business. “Daily purchases with average selling price (ASP) of as low as `300-400 is the first business model, one can follow, after which comes the weekly business model, which is a bit higher than the former. Lastly comes the monthly model which constitutes of 60-70% of the market with a monthly ASP of more than `2,000. The third model is a very sustainable one.”
It should be noted that this will be Flipkart’s second attempt at entering the online grocery business. In February 2016, Flipkart shutdown its grocery delivery Nearby, in less than five months of it’s pilot in Bengaluru, due to weak consumer response and narrow margins. The company has piloted the app in October 2015.
Amazon piloted it’s grocery app Amazon Now in February 2016. The service is now available in four cities including Bengaluru, Delhi and NCR, Mumbai and Hyderabad.
The e-trailer has sought permission from the government to stock and sell locally produced food items online. According to various news report, Amazon plans to invest $500 million for e-retail of food products in India.
Besides competing with Amazon, Flipkart will be at loggerheads with likes of Grofers, and BigBasket.
Krishnamurthy further spoke about the company’s plans on mergers and acquisitions. He said, “While we are open to merger and acquisition, the size does not matter. We are looking at building at capabilities. A lot of businesses we acquired over time which were actually small – PhonePe and Jeevs – an after sales service provider for large appliance, have grown today.
At the end he said that going forward, Flipkart will expand its offerings in India by entering various other segments.