Flipkart has launched its long awaited online grocery service called Supermart in Bangalore, with plans to expand to 5 – 6 (unnamed) major cities by the end of 2018. Flipkart’s strategy for Supermart would be to offer discounts and an ‘efficient’ delivery experience. It will also offer “open box deliveries” where customers can return items on the spot if they’re dissatisfied with a product. The e-commerce company will sell staples and consumables, including those from its private label ‘Flipkart Supermart Select’, FMCG and dairy products among others.

Interestingly, the company is not launching a separate app for its grocery play as customers can access Supermart through Flipkart’s android and iOS mobile apps, as well as from its desktop and mobile websites. This is unlike the strategy followed by its arch-rival Amazon, which sells consumer products through its Prime Now app. Flipkart will also extend its ‘buy now, pay later’ credit service to customers for their grocery purchases.

Supermart’s launch comes a little over 2 years after Flipkart shut down its grocery app Nearby after low demand. However, the company tried re-launching the service, then also called Supermart, in Bangalore last November.

Flipkart’s Supermart competes with Amazon (via Prime Now), Alibaba-backed Big Basket and SoftBank-backed Grofers in this segment. The company is eyeing transactions via consumer wallets. In October last year, Flipkart infused $500 million in its payments arm PhonePe, an addition to $75 million Flipkart had injected in PhonePe since acquiring it in 2015.

Reports indicate that the company is planning to invest $264 million in this vertical in the next three years. Another report by Business Standard indicates that Flipkart has set aside $400 million to set up infrastructure such as local warehouses and cold chain, specifically for its grocery operations.

Competition

Flipkart’s chief competitor in the segment will be Amazon, which also has been investing a significant amount of its resources to build its grocery offerings. In June, Amazon re branded its app-only grocery service to Prime Now from Amazon Now, and has expanded its product category along with new time slots for the users. For Prime members, Amazon offers 2-hour express delivery anytime between 6 am to midnight. The company, which started the grocery delivery service in March 2015, had the Department of Industrial Policy and Promotion’s (DIPP) approval to stock and sell local grocery produce online in April 2017.

Amazon also opened 15 Fulfilment Centres (FC) for its grocery delivery service earlier this year. The company is also planning to bring in its US-based fresh grocery delivery service Amazon Fresh to India.

Then there’s BigBasket and Grofers, who also received government’s approval last year to retail food products manufactured and produced in India. In terms of funding, Grofers raised $61.6 million from Tiger Global and Softbank in March, while BigBasket raised $300 million from Alibaba. There are also a few upcoming players such as MilkLane and DailyNinja in this space, who focus on small portions of the daily-need-items market and are seeing some sort of traction.

Kishore Biyani-led Future Group is reportedly set to start its hyperlocal grocery delivery soon, and it will deliver items like milk, eggs and bread, and later users will be able to get fresh fruits and vegetables along with other grocery items.

Online classified service Quikr is also experimenting online grocery business. However, Quikr’s spokesperson said that the company is experiment this and is still unsure whether it is going to enter online grocery space or not.

Food ordering and delivery platform Swiggy is too reportedly diversifying its hyperlocal delivery segment by adding groceries and medicines with the service called ‘Dash’, and is expected to start its pilot operations in next few months. The service apparently aims to utilise its delivery workforce of 30,000 people especially between 2 pm to 6 pm, which are usually lean hours.