E-commerce giant Flipkart is set to enter hyper-local grocery market yet again, after it shut down Flipkart Nearby back in Feb 2016. Speaking at an event organised by TiE DelhiNCR on Friday, Flipkart’s CEO Kalyan Krishnamurthy confirmed the development. He said,

“Eighty percent of the units bought in India are in the grocery segment. The grocery market is almost as big as $400 Mn-$600 Mn so we will have to get into it.”

Flipkart grocery

 Krishnamurthy also categorized the grocery market into three models.
  • First category being daily purchase where the average selling price is very low around INR 30-40.
  • Second, is the weekly market which has a slightly better ticket size.
  • The third and the largest (60-70%) is the monthly model where consumers spend over INR 2,000.

He further added that the third model is the most sustainable business in the groceries market. Flipkart’s arch rival Amazon launched Amazon Pantry in July 2016, a service that offers grocery and household essentials. It also claims to deliver the orders in a day.

The last two years have not been really great for the players in the hyperlocal grocery segment with 20 out of 74 already shut down. In January 2016, Grofers had shutdown its operations in nine cities and Shadowfax restricted its operations to only three cities so as to focus on generating cash flow and achieving operational efficiency. In April 2016, PepperTap announced that it will shut down its customer-centric grocery delivery app.

As per an IBEF report, the Indian food and grocery market is the world’s sixth-largest, with retail contributing 70% of the sales. The Indian food retail market is expected to reach USD 915 Bn by 2020. The Indian online groceries market is estimated to reach USD 40Mn (INR 270 Cr) by FY19 growing at a CAGR of 62% from 2016 to 2022.

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Ruchi Pandita

Ruchi is a word-weaver, a painter, an amateur photographer and a poet at heart. The ease with with she can explain the most complex stuff impresses people around her. Being a gemini, she is never content, always looking for new ways to explore her self and the world around. The startup revolution has greatly influenced her and she is using her talent to help budding entrepreneurs find the way forward.

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