Flipkart seems to have been beefing up grocery play with a Food Retail Licence. The Walmart-owned company has formed a new entity Flipkart Farmermart Pvt. The entity is likely to engage in creating private labels, building a supply chain and operate brick & mortar stores.
The Bengaluru-based company may have applied for permission to operate a food retail business. The move will enable Flipkart to counter its arch-rival Amazon that has been running a food retail business for over 30 months.
Quoting sources, a Moneycontrol report outlines that Flipkart board has already approved 2,500 crore for expanding grocery segment. Currently, Amazon and online grocers Grofers and BigBasket have been operating a food retail business.
Incorporated in 2017, Amazon Retail India Pvt Ltd had received a license to retail food products through an inventory-led model. It procures and sells grocery items like packaged foods, cooking and household stock, personal care items, and others.
While it’s not clear whether Flipkart will open offline stores or keep limited to online, the move would help its parent Walmart to understand consumer grocery business. As of now, the world’s largest retailer has been operating cash and carry B2B business akin to Metro.
Besides the size of the opportunity, Flipkart’s holistic plan for grocery is prompted because of Amazon increasing activities in the segment. Amazon along with private equity fund Samara had bought grocery retail chain More in January this year.
Despite several attempts, Amazon is yet to get any headway in grocery. It has been operating Pantry, Amazon Now and two hours new delivery service Amazon Fresh.
With a presence in the food retail business, Flipkart will be better equipped to compete Amazon in the grocery business. The Kalyan Krishnamurthy-led firm was also in talks with Bengaluru-based grocery chain Namdhari’s Fresh for acquiring latter’s business.
Of late, Flipkart has been hinting a comprehensive plan for the grocery segment. Will it succeed this time since the company past experiments in the segment didn’t go well?