Walmart is all set to to enter the Indian online grocery segment
After US-based Walmart acquired 77% stake in Flipkart, the Indian online retailer is ready to enter the Indian online grocery segment. About 40 % of US households shop grocery from Walmart. Will Flipkart be able to carry out a similar success in India with Walmart's backing?
The online grocery segment is valued at $1 billion and is a tough nut to crack as 95% of the segment is unorganized. Grocery is the fastest growing segment within the e-commerce genre. Flipkart has a ready customer base in the Indian market which will be a huge advantage. Flipkart has already started Supermart in Bangalore which handles 200-300 orders on normal days and upto 2,000 orders on days it offers special discounts.
Grocery retail in India is estimated to be over 60% of the country's total retail market. Analysts predict it to be anywhere between $400 billion to $600 billion now with potential to cross $700 billion by 2022. At present, online food and groceries (F&G) market is valued at around $1 billion and is expected to reach $5 billion by 2020 at CAGR of 72%. Indians spend more than 50% of their income on groceries which make it a must-capture sector for players. Around 95% of the grocery segment in India is unorganized, and a substantial portion of the market remain untapped.
Three main competitors in the online groceries retailing are Bigbasket, Grofers and Amazon. As of March 2017, BigBasket held about 35% market share in the Indian online grocery segment, closely followed by Grofers at 31.5% and Amazon at 31.2%, as per a report by Kalagato. There are some new entrants in the tier-II cities such as Flipfresh (Hubballi), Shopitdaily (Indore), PinkCityKirana (Jaipur), gharbaithebazar (lucknow) and kada (Thiruvananthpuram).
Big Basket is the market leader controlling close to 35% share of the Online groceries market. Big basket has a total funding of $885.7 million invested by Alibaba group, ICICI Venture, Paytm Mall, International Finance corporation among others. Founded in October 2011 and headquartered at Bangalore, Bigbasket has a daily order volume of 50,000 and is targeting a GVM of 2,500 crore in FY 2018. Bigbasket has 25 collection centers spread across the country. Most of these procure local vegetables and fruits for the 25 tier-I and tier-II cities the company operates in.
Albinder Dhindsa co-founded Grofers in 2014. Headquartered at Gurugram, Grofers is fulfilling a daily order volume of 25,000 and recorded a revenue of 750 crores during FY 17-18. Grofers has a funding of $227.5 million from investors like Tiger Global, Yuri Milner, Softbank and Sequoia Capital. It operates in 26 cities across India, including Agra, Ahmadabad, Indore, Mysuru, Surat and Vadodara. Grofers offers a wide assortment of groceries, fruits & vegetables, cosmetics, electronics, bakery items, pet care products and more.
Amazon India is a fully-owned subsidiary of US based e-commerce giant Amazon Inc. Amazon has been experimenting with the grocery model for some time in India. Amazon Now and Amazon Pantry are two such formats. Amazon Now, the hyperlocal grocery delivery app, has partnered with large-format modern retail stores like Food Bazaar and Hyper City to deliver all grocery items, including fresh produce. But this is available only in four cities-Bengaluru, Delhi-NCR, Mumbai and Hyderabad. Fresh produce is not available under Amazon Pantry, but customers can buy packaged household goods, including food items, which are all packed in one box and delivered the next day. This service is available in over 30 cities. Amazon has committed $500 million towards food retail venture in India.
The Indian groceries segment is huge in valualtion, but is a tough nut to crack. In the past, many startups such as Peppertap and Local Banya shut their operations due to falling numbers of daily orders. Even Flipkart had its share of disappointment when it tried to enter the market in 2015.