The Walmart-owned Indian e-commerce platform, Flipkart, has registered its new company called Flipkart Farmermart Pvt Ltd, in India to dig deeper into the food retail sector to challenge Amazon and run a direct to consumer operation.
Though it’s not clear if FarmerMart would have a digital platform for shopping, given the extreme focus on hybrid or omnichannel sales past year, it can be believed that the company wouldn’t be merely relying upon brick-and-mortar stores for FarmerMart.
The e-commerce company plans to operate a full-fledged food retail business through Flipkart Farmermart. The firm also plans to commence its private label, own grocery supply chain, and even open stores.
Coming in terms with government rules
The government of India recently changed its rules in food retail to allow e-commerce marketplaces to sell directly to consumers. Post-change, the giant online seller registered FarmerMart as a corporate entity on 4th October, according to a report by ET.
Sources said, “There is a lot more that Flipkart can do in food. The board has consented to invest Rs 2,500 crore to expand its operations in the grocery business.”
Last month, Flipkart’s board meeting in Singapore gave it the approval to register FarmerMart as a company, and the unit will entertain the customers directly. FarmersMart will have a separate board, staff, and inventory that cannot be shared with Flipkart’s e-commerce business under the rules & regulations laid out by the government.
Flipkart must pull up the socks to secure a spot in the online grocery market
Flipkart’s rival Amazon has already secured a retail food license in July 2017 and has been investing ever since in ascending its grocery business. In Flipkart’s case, the company will apply for a license now and will then go-head from the Department of Industrial Policy and Promotion.
Amazon has already promised to invest $500 million over five years to sell third-party and company-owned food products. The company has also forayed into the food delivery sector and has launched a two-hour delivery service for fresh fruits and vegetables.
According to reports by Research and Markets, a research firm, only 0.15% of Indians make purchases through online channels. The market, however, is expected to grow at a CAGR of 68.66% between 2018-23, to reach from Rs 6,201 crore in 2018 to Rs 1,03,413 crore by 2023.
The application for the food license will unlikely be tied into Flipkart’s SuperMart business that handles the delivery of groceries, fresh produce, and other daily essential items due to the food retail norms. The firm has already taken SuperMart to five cities this year, including Bengaluru, Chennai, Hyderabad, Delhi, and Mumbai.