Walmart, Flipkart invest in Ninjacart to take on Amazon in grocery business

Flipkart is betting big on the grocery segment and is planning to scale its service across India, including tier-II and-III cities, in the next five years

US-retail giant Walmart and e-commerce firm Flipkart said they have made a joint strategic investment in Ninjacart, a startup which provides business-to-business (B2B) supply chain infrastructure and technology solutions. The three firms aim to help ensure better access to high-quality fresh produce for more retailers and consumers across India while also creating economic opportunities for farmers. The companies did not reveal the financial details of the transactions. This is the second strategic investment for Flipkart  in the logistics segment this year, which is expected to help it take on Amazon's online grocery delivery business.Last week, Flipkart said it has made a strategic minority investment in Shadowfax, a cross-category and full-stack logistics platform founded, as part of the company’s $60-million Series D funding round.

Partnering with Ninjacart will help Walmart and Flipkart strengthen direct sourcing of fresh produce for Walmart India’s Best Price B2B cash-and-carry stores and Flipkart’s online grocery business Supermart. 

“Developing Flipkart Supermart over the past year, we have focused on creating the right infrastructure, supporting local farmers, producers and food processors, and building sustainability into the ecosystem, all while creating thousands of new jobs and bringing quality, convenience and value to consumers,” said Kalyan Krishnamurthy, CEO, Flipkart Group. “In Ninjacart, we see a company that shares our values, our pioneering mindset and our commitment to tech-driven innovation that improves life in India,” he said.

The investment will also support Ninjacart to expand its customer base, reach new cities and gain exposure to global best practice to enhance the efficiency of the local fresh produce ecosystem. “Ninjacart wants to make food safer and more accessible, while ensuring a fair price for everyone involved. We are excited that Flipkart and Walmart are joining us to make this vision a reality and showing confidence in our technology and business model,” said Thirukumaran Nagarajan, CEO and Co-founder of Ninjacart. 

Since being bought by Walmart for $16 billion in May last year, Flipkart has made a handful of strategic investments and acquisitions. Last year in August it acquired artificial intelligence firm Live.ai and then in September bought Israel-based retail analytics company Upstream Commerce. According to sources Flipkart is betting big on grocery segment and is planning to scale its service across India, including tier-II and-III cities, in the next five years and strategic investments like Ninjacart and Shadowfax are going to help to achieve that. Currently, the firm delivers groceries in five cities, including Mumbai, Bengaluru, Chennai, Hyderabad and Delhi NCR, through Flipkart Supermart. Grocery is presently a $400-billion market, being the biggest part of the overall retail segment in India, though the penetration of online grocery is just 1 per cent. The grocery market has the potential to cross $700 billion by 2022.

“Flipkart has realised that they have leadership in smartphones, are good in fashion, but grocery is something where they have not invested a lot and also with the entry of Walmart, the idea is to build the grocery business,” said Satish Meena, a senior forecast analyst at Forrester Research. “They don’t have the supply chain and logistics (at a large scale) to deliver the groceries. Most of the Flipkart’s existing categories have large warehouses and not distributed ones. They are always looking for assets that they can acquire. This (Ninjacart) is not the last investment that Flipkart is making, there would be more like supply chain and last mile delivery kind of companies and also offline grocery retailers,” said Meena.

Earlier this year, the company formed Flipkart FarmerMart Pvt. Ltd. in Bengaluru to operate its food retail business. Last month the country’s competition watchdog Competition Commission of India (CCI) approved Amazon’s proposed Rs 1,500-crore deal to acquire 49 per cent stake in Future Coupons, a subsidiary of Future Group, India’s largest retail firm.

Founded in 2015, Ninjacart uses  sophisticated supply chain algorithms it developed in-house. The firm leverages big data, predictive analytics, mobile applications and the Internet of Things to power a just-in-time supply chain that connects farmers to retailers via a network of more than 200 collection centers and 1,200 warehouses across India. It moves over 1,400 tons of fresh produce per day, having doubled its volumes in the last four months.

The paperless Ninjacart supply chain creates a seamless link between its more than 44,000 farmer suppliers and its customer base of 60,000 kirana stores and restaurants across seven cities. The efficiency of the system allows Ninjacart to dramatically reduce the time for produce to travel from farm to store and to allow transportation at ambient temperature to reduce costs and prevent food waste. Ninjacart said it provides 100 per cent traceability along the supply chain and has slashed food wastage to less than 1 per cent, compared to 35 per cent in traditional supply chains. The firm said it works closely with its farmer partners to ensure a reliable supply of high-quality produce that aligns with market need. It provides data-driven recommendations on what crops to grow and communicates accurate pre-harvest price and demand and pricing information to help create clarity around farmer earnings.