On 22 August, Amazon gained a yard on its peers in the grocery race in India. It launched Amazon Fresh, a hyperlocal grocery distribution chain which delivers over 5,000 items—including fruits, meat and dairy—within two hours. After rolling out the service in rival Flipkart’s home turf of Bengaluru, Amazon is now closer to cracking the hyperlocal supply chain—the delivery of products within mere hours—something it has struggled with in the past. 

The Indian grocery market is currently a $400-$500 billion market, according to Ankur Pahwa, head of e-commerce and consumer internet at advisory services firm EY. However, says Pahwa, the penetration of e-commerce in this space is just 0.5% at the moment because of the supply chain challenges involved. Despite this, Pahwa predicts the share of online groceries will double by 2021.

With a multi-billion dollar opportunity waiting to be realised, the next wave of growth for e-commerce companies will likely be through your grocery cart. And the battle lines are already drawn. In addition to Amazon, online grocery players like Bigbasket and Grofers, and even food delivery company Swiggy and on-demand delivery service Dunzo are in the fray. All of them backed by deep-pocketed investors. Alibaba for Bigbasket, SoftBank for Grofers, and Naspers and Google backing Swiggy and Dunzo, respectively.

Walmart-owned Flipkart, India’s largest e-commerce firm, is no different. Already, the e-commerce giant has made its ambitions for its groceries arm ‘Supermart’ clear. Flipkart expects grocery to be one of its top categories in the next 3-5 years. To do this, it intends to expand the online-only Supermart stores beyond India’s major metros and into tier-II and -III cities in the coming years, says its grocery head Manish Kumar.

Flipkart started Supermart in 2017 after a short-lived hyperlocal grocery pilot in 2015. The service is now operational in five cities, primarily selling staples, packaged food, snacks and beverages. This, obviously, is a far cry from Amazon’s latest offering. Missing from Flipkart’s arsenal are fresh fruits, vegetables, meat and dairy products. To be a full-stack grocery provider, Flipkart needs to bridge this gap. Fresh food, after all, requires more frequent top-ups compared to, say, rice or pulses, which are typically monthly purchases. 

Flipkart has been working to fix this. Over the last year, it’s been running a fruits and vegetables pilot in Hyderabad. This, according to an executive in its grocery segment, is to figure out the supply chain for perishables as well as understanding the customer demand for perishables.

But Flipkart doesn’t just want to play catch-up. It wants to leapfrog its rivals. The company has a hyperlocal pilot planned for December to see how it can extend its hyperlocal capabilities to deliver regular products from its site within a few hours as well, say two executives at Flipkart. This could be a potential game-changer, turning Flipkart from a laggard to a pioneer.

AUTHOR

Abinaya Vijayaraghavan

Abinaya is a Bengaluru-based writer, covering the sprawling and exciting world of Indian e-commerce. When she is not trying to understand alpha sellers and complex supply chains, she enjoys travelling and playing badminton. Abinaya was previously a reporter at Reuters.

View Full Profile

Sign up to our India edition to read this story instantly

To sign up, you’ll create an account that will give you access to a new free story published once a week and archive of 214+ previously published free stories from our India edition. You’ll also receive one email every morning from us introducing the day’s story.

If you’ve already signed up, just enter your email below or login using Facebook or Google.