Flipkart Enters Super-Hot Online Grocery Vertical To Counter Amazon, Snapdeal & Others
Indian eCommerce is all set to witness a unique fight for survival now; as right from potatoes to yachts, consumers will be spoiled for choices online.
Flipkart, India’s biggest ecommerce portal has decided to jump into the groceries market as they will sell vegetables and groceries on their platform. By doing so, they will be in direct competition with other biggies such as Amazon and Snapdeal along with brick and mortar stores such as Reliance Fresh in addition to established niche players such as BigBasket and LocalBanya.
Out of $525 billion retail market in India, 60% is spent on groceries which makes it a $350 billion or Rs 20 lakh crore market as of now.
We are world’s 6th largest grocery market in the world, and every major ecommerce portal wants a share of this pie. However, online grocery market is still in a nascent stage, as only 1% of the groceries which Indians purchase as of now are online. It is expected that by 2020, online grocery market would be 2% of the overall groceries market, making it a niche market worth $10 billion (Rs 60,000 crore)
As per reports, Flipkart may start this vertical by the end of 2015. They have declined to comment right now.
Here are the major competitors of Flipkart in this new and exciting market:
Last month, Amazon announced their foray into online groceries market, with a unique marketplace based model of local kirana stores. A kind of hyper-local delivery model, customers would be able to order online and pick up from their local kirana store which will save them time and ensure that the products are fresh. This is certainly a disruptive business model, which can trigger a new stream of growth.
Earlier this month, Snapdeal announced partnership with Godrej Nature’s Basket to sell online groceries, and ensured that the products are delivered same day. Along with the regular grocery products, they will also introduce fresh bakery products, non-veg offering and instant food as well.
Reliance Fresh already have brick and mortar hyper markets which sell groceries. Last year in November, they announced their foray into online groceries market with the launch of a new website. They have incorporated a unique ‘direct delivery’ model for fast and speedy product delivery.
BigBasket is currently the biggest portal dedicated exclusively to selling groceries online. They have already launched their services in Bangalore, Mumbai, Hyderabad New Delhi and Pune and are expanding rapidly to other cities as well. With over 12,000 products from 1000 brands, they are churning out revenues worth Rs 250+ crore every year. Currently they are valued at over $100 million after they received fresh funding of Rs 200 crore to expand in 10 more cities last year.
Some other major players in this niche includes: LocalBanya, Zip.in, AaramShop and more.
Groceries, just like medicine or education is an ever green market; and even if a buyer avoids buying smartphones and tablets, he will never stop buying groceries. However, there exists several challenges in convincing the consumer to buy groceries online which includes the fear of quality of product and the time-gap in ordering and delivery of the product.
Being a time sensitive and extremely cost sensitive niche, Flipkart along with Amazon and others need to ensure that they prove themselves even better and more efficient than the local kirana store.
The fight has just started!