How This Indian E-commerce Giant Is Looking To Fight Its Global Rival In Food Retail Market
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At a time when competition between e-commerce giants has been fueling due to festive sales, Walmart-owned e-commerce giant Flipkart is now looking to lock horns with Amazon in the food retail space. According to media reports, Flipkart has registered a new entity named Flipkart Farmermart Pvt and is preparing to apply food retailing licence .
Citing sources, Moneycontrol reported that the company board has agreed to invest INR 2,500 crore to expand operations in grocery division. According to the report, the e-commerce giant will operate a full fledged food retail business including private labels, grocery supply chain and open stores through the new company. The report also stated that Flipkart is looking to rely on Walmart’s expertise in the food supply chain business to capture the market and stay ahead of its rivals.
“In line with the Government of India’s FDI policy, which allows 100% FDI in food retail for food produced & manufactured in India, Flipkart is applying for appropriate licenses from the government. We’ve secured all internal approvals for the same already. This newly registered local entity ‘Flipkart Farmermart Pvt Ltd.’ will focus on food retail and is an important part of our efforts to boost Indian agriculture as well as the food processing industry in the country," said Kalyan Krishnamurthy Flipkart Group CEO in response to Entrepreneur India's query.
"We’re looking forward to invest more deeply in the local agri ecosystem, supply chain and working with lakhs of small farmers, farmer producers organisations (FPOs), food processing industry in India to help in multiplying farmers' income and bring affordable, quality food for millions of customers across the country," Krishnamurthy said in a statement.
Not First Time For Flipkart
This is not the first time Flipkart has ventured in the food and grocery business as the e-commerce company had launched its Supermart in August 2018. Through this, Flipkart offers grocery products such as staples, FMCG, dairy products and also private labels.
The service is currently available in Bengaluru, Chennai, Hyderabad, Delhi and Mumbai. In its official blog post, the company had said that it will be collaborating with farmers, producers organisations and local micro, small and medium enterprises (MSMEs) to build a sustainable ecosystem and also generate jobs.
Flipkart Vs Amazon India
The Indian e-commerce giant faces stiff competition from Amazon India in India currently. Now both the companies will be competing with each other in the food retail front also.
According to media reports, Amazon had received its food retail licence in 2017 and has been working since then to develop its grocery business. It had also committed to invest $500 million in the business. In March, it was reported that Amazon had invested INR 240 crore in its Amazon Retail India (ARIPL), responsible for managing supply of grocery and food items.
Amazon’s ARIPL procures and sells grocery items such as packaged foods, cooking and household stock, personal care items. It also sells perishable products such as fruits and vegetables. The company also recently launched a two-hour delivery service for fruits and vegetables.
Why Bet On Food Retail Space?
Food retail space has been garnering a lot of attention by the industry giants . Reliance Retail, Aditya Birla Retail, Future Value Retail are some of the dominant players in the market. BigBasket, Grofers, Amazon Pantry are some of the notable players in food e-tailer space. According to a 2019 report by Global Agricultural Information Network (GAIN), the food and grocery retail sector in India is dominated by traditional stores such as neighborhood shops or kirana stores, which constitute about 98 percent of the total market share.
The report also revealed that the Indian food retail market is expected to cross $800 billion by 2023. Also, the new trade formats such as supermarkets and hypermarkets are expected to grow from two to four percent by 2020.