Flipkart is eyeing grocery segment once again

Keeping a close eye on its arch-rival Amazon's moves, Flipkart too is set to re-enter Indian grocery segment once again.

"Yes we will get into grocery... 80 percent of units bought in India is grocery... the grocery market is 400-600 million dollars, so we have to get into it," Flipkart’s Chief Executive Officer Kalyan Krishnamurthy said at TiE event last week.

Notably, a couple weeks back, Amazon detailed its $500 million investment plan targeting India’s food retail space along with setting up of several brick and mortar stores in the country. This would be Flipkart's second foray into the grocery segment after ‘Nearby’, a separate grocery arm launched by the e-tailer in 2015. Though the app shot to over 100k downloads but failed to clock the expected numbers and Flipkart shut it down in February last year.

Interestingly, Amazon won't be Flipkart's sole competitor here as online food and grocery segment also includes players like BigBasket and Grofers, who are also looking at expanding their operations.  "There are three models for grocery. One is a daily purchase, the average selling price (ASP) there is very low at about Rs 300-400. Then there is a weekly business model, which is a bit higher. Thankfully, 60-70 per cent of the market is the third one which is monthly basket where the average is about over Rs 2,000. With those, it's a very sustainable business," Krishnamurthy said.

As per industry reports, the online F&G delivery market is estimated to be around USD 600 million in India and pegged to touch USD 5 billion by 2020. Talking about acquisitions, Krishnamurthy said the company is looking at targets for enhancing capabilities.

"We will look at M&A, size doesn't matter. What we are looking at is capabilities. A lot of business we acquired over time were actually small," he said citing examples of PhonePe and Jeeves. Flipkart, which has made big-ticket acquisitions like Myntra and Jabong as well, is believed to be in fray for acquiring its smaller rival Snapdeal.