Flipkart to offer 90-minute deliveries of groceries
New Delhi, July 28: Walmart-owned Flipkart on Tuesday announced 90-minute delivery for groceries as it looked to take on Amazon.com and billionaire Mukesh Ambani's upstart JioMart in the fast-growing Indian market.
The hyperlocal delivery service 'Flipkart Quick', which will also offer 90-minute deliveries of fresh vegetables, meat, and mobile phones, will initially be available at select locations in Bengaluru and would be gradually scaled up and expanded to six large cities by the end of the year, Flipkart Vice-President Sandeep Karwa told PTI.
India's USD 950 billion retail market is predicted to grow to USD 1.3 trillion by FY26. Of this, e-commerce business is estimated at around USD 78 billion which is expected to cross USD 100 billion by 2025. And grocery is the latest category where e-commerce firms are slugging it out. Amazon offers a quick-delivery service for groceries.
This segment also has competition from Alibaba-based BigBasket and JioMart which is experimenting with using WhatsApp to connect consumers with local Kirana stores. "...everything which we expect our neighbourhood departmental store to carry is all what we made live. Along with this, we've also announced the launch of our fruits and vegetables, and meats category...we've created a storage space where we've enabled a lot of our sellers to store their inventory," Karwa added.
Online grocery delivery has also gained significant traction amid the COVID-19 pandemic and with the entry of JioMart in the segment, the competition is set to intensify further. Offline retailers, who have taken a major hit on account of the lockdown, are also keen on partnering with digital platforms to facilitate the delivery of goods. In the past few months, Flipkart has tied up with retail chains like Spencers and Vishal Mega Mart to enable hyperlocal deliveries of groceries and essentials in various cities.
According to a recent report by Goldman Sachs, India's e-commerce business is expected to grow at a compound annual growth rate (CAGR) of 27 per cent to reach USD 99 billion by 2024, with grocery and fashion/apparel likely to be the key drivers of incremental growth. The report said BigBasket and Grofers accounted for more than 80 per cent of the online grocery segment in 2019 but projected that Reliance Industries would capture half of the online grocery sales with the help of its partnership with Facebook.
On competition in the hyperlocal delivery space, Karwa said Flipkart is offering a complete package. "It's not a logistics solution or just a marketplace solution, it's a full complete package that ensures that the right sellers and right logistics partner are in place. Also, our larger differentiation is going to be the quality of products that we deliver...while we are not the first ones to do this (hyperlocal delivery) but I am hoping that we are the first ones to do it right," he added.
Karwa said in the future, the company will also partner with chains of local stores in various cities that focus on quality and service standards. Flipkart will also leverage its partnerships with companies like Ninjacart and Shadowfax for the service.
"We start today in Bengaluru with Shadowfax as our partner and they are going to deliver these products in 90 minutes. We are going to also enable Ekart (Flipkart's logistics arm) to be a partner. Eventually, we also believe that there will be some offline store partners who might say whenever there is an order within the vicinity from my store, I can do that job," he said.
Many players, including Flipkart, have tried the 90-minute delivery model in the past but have not been able to scale it. "It's not an easy problem to solve. We wanted to ensure that the experience is consistent and that the unit economics is playing out well. There is a very strong tech which we have deployed using which we believe we will be in a position to do it consistently...and we believe that unit economics is something which we should be able to solve," Karwa said.
Flipkart Quick will provide consumers with an assortment of more than 2,000 products in categories varying from grocery, fresh produce, dairy, meat, mobile phones, electronics accessories, stationery items, and home accessories in the first phase. Consumers can choose to order in the next 90 minutes or book a 2-hour slot as per their convenience, and the orders get delivered between 6 am to midnight with a minimum delivery fee of Rs 29. Flipkart Quick will debut in Bengaluru in select locations, including Whitefield, Panathur, HSR Layout, BTM Layout, Banashankari, KR Puram, and Indiranagar.