Flipkart shuts down its hyperlocal grocery delivery service Nearby

This, while Amazon is upping its hyperlocal game with Amazon Now

India's largest e-tailer Flipkart has shut its on-demand grocery delivery service Nearby, which it was piloting in Bengaluru, weeks after global rival Amazon fully rolled out its own version of the service Amazon Now in the city.

Launched in October as an experiment in a few localities across Bengaluru, Flipkart Nearby was operating across 30 pincodes by November. The service offered same-day delivery of groceries and other household items between 10 am and 8 pm.

"The experiment was a test for understanding efficiencies and operations of the hyper local business. The project has now run its course and the learnings from this pilot will now be used for future operations of the company," said a company spokesperson in an email response. Mint reported the story first.

Nearby was Flipkart's effort to take on pure-play hyperlocal grocery services such as Grofers, BigBasket, LocalBanya and PepperTap. With a massive fleet of delivery personnel from its EKart arm, the company thought it best to tap into that resource rather than build an independent Flipkart Now team.

Amazon, the other large e-commerce player that made an entry into the hyperlocal delivery space, launched Amazon Now at the beginning of February after running a pilot for months. It offers customers 2-hour deliveries on groceries and household goods which its delivery agents procure from large supermarkets and even small Kirana stores.

Hyperlocal was one of the hottest buzzwords in the Indian startup space during 2015, with several companies raising several rounds of capital in a very short period of time. However, being a highly capital intensive space, competition forced several players to undercut costs for customers, making the business model unsustainable.

Even Flipkart offered customers of Nearby free delivery of products for a certain period of time in the hope to boost adoption among users in Bengaluru. For pure-play grocery delivery startups the entry of much larger and better-funded companies has been the biggest cause for concern.

Apart from Flipkart and Snapdeal, two other Indian Unicorns (companies valued at over a billion dollars) are looking for a pie of the hyperlocal market. Ola runs its Ola Store hyperlocal marketplace, while Paytm is also planning to launch hyperlocal services in the near future.