Amazon, Flipkart will take at least a year to build supply chain capabilities: BigBasket's Hari Menon

BENGALURU: Amazon and Flipkart will take at least a year to scale up their supply chain capabilities to sell groceries and fresh food online across top cities, but the ecommerce rivals’ intent to double down on the sector will set the market for growth in the next few years, Hari Menon, CEO, BigBasket told ET.

“This is very good for the sector and how modern trade grew and opened up a new way to shop,” Menon said, adding that as grocery extends beyond the high socioeconomic classes towards the midsection, the market will expand.

“These new set of customers, they have all transacted online on Amazon or Flipkart, and this group will move to online grocery ordering,” he said.

SoftBank-backed Grofers, and DMart, which is largely an offline player, too, are targeting these customers.

Fresh produce and perishables are the most complex categories to crack in online grocery, given the complexity of procurement, licensing, storage, and last-mile delivery.

New entrants
Earlier this week, Walmart-owned Flipkart said it was entering food retailing through newly registered Flipkart FarmerMart.

Amazon has already committed to invest $500 million over five years to sell third-party and own private-label food products. A few months ago, it launched a two-hour delivery service for fresh products and vegetables.

In a bid to compete with new entrants, BigBasket has merged its two core businesses, on-demand 90-minute delivery, which offered a smaller range of products, and planned next-day delivery, where customers get to choose from a larger range, to deliver in four hours.

Grocery is seen as the next big category in e-commerce, attracting the largest online and offline players to commit billions of dollars in growing the market.

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Online food and grocery retail, with only 0.2% penetration, is expected to grow 55% to reach 1.2% of the overall market in 2023 and amount to $10.5 billion, according to a joint report by BigBasket and consulting firm RedSeer.

The growth will be driven by increased customer trust and comfort in e-tailing, wide varied assortment and express delivery options.

The Indian government sidestepped intense opposition to foreign investment in multi-brand retail in 2016 to create a food retailing segment, but has asked ecommerce firms to keep its food-only retailing venture at arm’s length from their flagship marketplace business, by maintaining separate boards, staff, bank accounts and inventories.


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