Flipkart Grocery leans on smaller towns in bid to reach 20,000 PIN codes

Flipkart Grocery currently offers 7,000 products in 1,800 cities covering 10,000 PIN codes, served by 23 fulfilment centres spread over an area of 2.75 million sq ft

Located at Nelamangala, a town in Bengaluru Rural district, is Flipkart’s largest grocery fulfilment centre in Karnataka. Inside the facility, which is spread across 150,000 sq ft, employees, both men and women, are busy handling the order fulfilment process for products ranging from biscuits, chocolates and juice bottles to shampoos, fruits and vegetables. This includes processes such as order picking, processing, and scanning items with various gadgets to check quality, packaging and shipping.

The last leg of dispatch — sorting according to PIN codes —is 100 per cent automated at the facility. The unit has an automated storage retrieval system (AS/RS), which includes many robots working seamlessly with humans. This automation not only brings together the orders (totes) of a certain cross-dock but also arranges them in a sequence for last-mile delivery. Doing this activity in an automated manner saves the square footage space, and workforce, and improves the accuracy of sequencing.

“We are constantly getting better at technology,” said Smrithi Ravichandran, vice-president, head of grocery at Flipkart. “It helps us to move faster, both in terms of speed and cost.”

Indeed, the Walmart-owned e-commerce firm is rapidly scaling up its grocery operations across the country. It competes with other e-commerce firms such as Amazon, Reliance’s JioMart and the Tata Group for a share of the grocery and food market. This segment is expected to become a $790-billion market by 2024 from $603 billion in 2019, according to analysts.

The demand is not just in the metros, and the market is shifting towards organised channels, as e-grocery finds acceptance in smaller cities and towns.

“Our ambition (for grocery) is to reach 20,000 PIN codes,” said Ravichandran. “As the grocery density goes up, we would (expand) the grocery fulfilment centre footprint. The business, she said, needed them to really get into tier 2 and tier 3 homes. “If you look at the Indian consumer wallet for household spending as you go to (smaller) cities, (you will find that) the share of grocery becomes very high. Without having a decisive play into grocery, we wouldn’t continue to be leaders in e-commerce.”

Flipkart Grocery currently serves more than 1,800 cities and over 10,000 PIN code areas across all 28 Indian states. It has ramped up its operations in the past two years by establishing 23 fulfilment centres spread over an area of 2.75 million square feet. “We expanded grocery operations to 1,800 cities six months back, and the business is already equal to the business generated from the metros,” Ravichandran added. The grocery label offers over 7,000 products, ranging from daily household supplies, staples, snacks and beverages, confectionery, personal care, and fresh fruits and vegetables.

The firm works with sellers to offer groceries via multiple channels such as private label platform Supermart, hyperlocal service Quick and social commerce arm Shopsy. The company had said that Quick would make the groceries available to the consumers in under 90 minutes. It has now halved that delivery time to 30-45 minutes in five cities, including Bengaluru, Hyderabad and Chennai.

Ravichandran said according to various research studies, customers are fine with that delivery time period instead of 15 minutes as long as the quality of the product is not impacted.

“For quick commerce, we have been cautiously optimistic. We would have to continuously work on unit economics and make it a sustainable business,” she added. “Our bets on whether the delivery period should be 90 minutes or 10 minutes or somewhere between, and how much should be fresh versus dried food and getting the right mix of it, is something we are working on. This includes ensuring better utilisation of dark stores and supply chain.”

Flipkart plans to introduce its hyperlocal service to other cities in a phased manner this year and aims to be present in over 200 cities by the end of 2022. Meanwhile, Flipkart Grocery is also handholding farmers in their digital journey. It has taken on board multiple Farmer Producer Organisations (FPOs).

Flipkart’s chief rival, Amazon, also continues to make progress with its single grocery store called Fresh. It has now expanded to more than 20 cities where the firm said it offers customers very high-quality fruits and vegetables, and a large supermarket grocery selection that is available in two hours from 6 am to midnight. It has plans to scale it up further. In the remaining 250-odd cities, the firm claims it offers ambient grocery such as atta, pulses and rice at competitive prices.

Another grocery player, the Tata Digital-owned BigBasket, recently said that it expects gross merchandise value (GMV) on its platform to grow by 30 per cent to Rs 13,000 crore in the current fiscal with a push from its quick commerce business and expansion of its presence across the country. The company will scale up offline stores from 90 to 695 in a year to reach out to 100 per cent of its customer base. It had posted GMV of around Rs 10,000 crore in 2021-22.

Shopping for growth

Flipkart Grocery currently serves more than 1,800 cities and over 10,000 PIN code areas across all 28 Indian states

Offers over 7,000 products, ranging from daily household supplies, staples, snacks and beverages, confectionery, personal care, fresh fruits and vegetables

The firm works with sellers to offer groceries via multiple channels such as private label platform Supermart, hyperlocal service Quick and social commerce arm Shopsy

It has halved that delivery time to 30-45 minutes in five cities including Bengaluru, Hyderabad and Chennai

According to various research studies, customers are fine with that delivery time period instead of 15 minutes as long as the quality of the product is not impacted

Flipkart plans to introduce its hyperlocal service to other cities in a phased manner this year and aims to be present in over 200 cities by the end of 2022

Is also handholding farmers and has taken on board multiple Farmer Producer Organisations