From Flipkart to Reliance, e-tailers eye $28 billion in grocery segment

Two years back, Amit Agarwal, senior vice-president and country manager of Amazon India, predicted grocery would be the biggest money churner for online marketplace players. Mocked then, his competitions are now trying hard to catch up with the e-grocery space.

Estimated to be a $28-billion segment within the $65-billion online marketplace space, players such as Amazon, its biggest rival Flipkart and soon-to-be-launched Reliance e-commerce are all pumping in their resources into this space.

Flipkart, soon to be backed by Walmart Inc.post-approval from Competition Commission of India (CCI), is planning to allocate close to $400 million just for the e-grocery segment. 

On the other hand, Reliance e-commerce, sources claim, is concentrating on making the biggest grocery store omni-channel network in the country on the back of its 3 million merchants and close to 8,000 store networks. 

Amazon India is planning to introduce some of the Whole Foods range by the end of this year or early next year, sources say.

Flipkart readies its ‘Supermart’

Country’s most-valued e-commerce firm has set the ball rolling for grocery segment with the backing of retail giant Walmart. Sources say the company is planning to set aside close to $400 million for having a strong network of hyperlocal grocers, cold chain and warehousing.

“Grocery is a constant point of discussion for the company. If it was about electronics earlier, they have now realised that repeat customers with smaller but consistent ticket size would only come from grocery. Walmart is helping Flipkart devise a strategy to go forward with the plan,” says a source close to the company. 
From cold chain to its farm aggregation centre, Walmart would open up all doors for Flipkart so that it gets the grocery as well as fresh produce for its online play. “The company has an expertise in fresh produce and has one of the largest cold chains as well as farm aggregation centres across the country,” adds the source.

Awaiting CCI clearance, funds and expertise from Walmart, Flipkart has not been able to go ahead with its plans of getting into the grocery vertical and is still running pilots in select cities. The company is supposed to get experts from Walmart to understand the logistics behind grocery delivery.

Reliance e-commerce to target omni-channel retail

The company having a ready base of 3 million offline merchants, 7,500 stores and taxation and inventory management solution JioGST would be using all these to make its grocery service hyperlocal.

The company plans to expand to 10,000 stores in the next two years and would use them to make delivery of groceries hyperlocal. Also, the company is working on training, equipping and taking its merchant base to the Cloud for better logistics and inventory management.

Bringing in more merchants to its Cloud would make its omni-channel model of e-commerce smoother. “Its more than 3 million merchants would be offered Cloud services at the most competitive prices,” adds the person.

Amazon plans to bring Whole Foods

Amazon sells 50 types of digestives on their platform. By year-end, Amazon might bring in its US-based global food brand Whole Foods to India, sources in the know say. 

While plans are not yet final, the company, which has two different grocery segments Amazon Pantry and Prime Now, is toying with the idea of bringing in healthy, organic and niche products to its burgeoning millennial user base at affordable prices.
The company, which is fine-tuning its grocery service for the last two years, is not seeing more than 50 per cent of the total sales coming from grocery segment.

The global e-commerce giant is in preliminary talks with Indian supermarket, hypermarket and retail companies to buy a stake in one of these firms. Some of the regional hypermarket and supermarket players have also held discussions with Amazon.