Walmart-owned Flipkart is set to launch a separate business vertical to cater to 90-minute delivery of goods from local stores and its own small fulfilment centres, people aware of the matter said.
The homegrown ecommerce company will start with grocery services, they said, as it seeks to muscle in on the hyperlocal segment, where competition has intensified with the likes of Reliance-owned JioMart and global ecommerce giant Amazon entering the offline retail ecosystem.
The ecommerce firm will leverage the last-mile capabilities of logistics startup Shadowfax, in which it invested $60 million last year, in order to facilitate its entry into the segment, the people said.
“The launch is a month away, but the long-term plan is to deliver everything in 90 minutes,” said a person directly aware of the matter. Flipkart and Shadowfax did not reply to ET’s email seeking comment.
To begin with, the etailer will start deliveries from its own dark stores, or local warehouses and select shops, but over time it will expand that to corner stores and modern retailers within a select neighbourhood, the person said on condition of anonymity.
The Covid-19 pandemic has led to faster convergence between online and offline commerce, with traditional businesses increasingly collaborating with online channels as a long-term strategy to generate demand.
“Flipkart plans to execute deliveries of consumer goods, groceries, medicines, from nearby stores under a separate brand name,” another person privy to the development said, adding that the service will be part of the Flipkart app.
The service will begin in Bengaluru and is likely to be a one-city pilot till the company’s flagship Big Billion Sale, which is scheduled in October each year.
“Today, Flipkart’s grocery infrastructure is in five cities. We will very gradually expand it to more and more cities as and when we have the right value proposition for the customer and a lot of it will also be done through partnerships with the ecosystem,” Kalyan Krishnamurthy, CEO of Flipkart had told ET in an interview earlier this month.
Read: Customers have turned more value-conscious: Flipkart group CEO Kalyan Krishnamurthy
The etailer’s move to start with grocery items stems from the fact that consumers tend to repeat grocery purchases and is often a priority over categories such as smartphones and fashion. “Covid-19 has forced offline stores to adopt online sales,” said another person in the know.
In fact, top retailers including Vishal Megamart, Spencer’s, Tata Consumer Products, as well as FMCG companies ITC and HUL are forging direct partnerships with online retailers to help scale their business presence.
Last month, JioMart, which lists fresh food, pulses, packaged food, household cleaning items, and pet food on its website, scaled up operations to more than 200 cities after an initial pilot in Mumbai.
“Social distancing has accelerated adoption of e-commerce and consumers will continue to embrace digital platforms for a variety of needs,” said Pinakiranjan Mishra, Partner at EY India.
Read: Pandemic gives hyperlocal model a new lease of life
Hyper-local delivery, a model of picking up goods from neighbourhood stores, warehouses, and supermarkets, had gained widespread investor interest a few years ago.
A bunch of startups had launched ventures to ride the boom and subsequently raised venture capital. Those models, however, failed due to poor unit economics. This time round, the tie-ups between online firms and brick-and-mortar retailers, especially the larger, organized ones, are favouring offline retailers.
In March, a slew of internet businesses including Meesho, Zomato, NoBroker and Snapdeal diversified into the grocery space by forging partnerships with brands, corner stores and last-mile delivery companies.
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