 "Hari Kumar G, vice president and head of grocery, Flipkart.")
Flipkart expects grocery to be one of the highest-growing businesses for the e-commerce company in the next couple of years, said Hari Kumar G, vice president and head of grocery, Flipkart. In an interview with Peerzada Abrar, Kumar said that the company is deepening the reach of its grocery services in metros and expanding in tier-2+ towns across Bharat. Kumar said both quick-commerce and next-day delivery models can co-exist. However, the company is also exploring providing quick-commerce services in the future based on the demand it witnesses in certain locations in the country. Edited excerpts:
Q1. What is the transformation you are seeing in the grocery business?
The expectation from a consumer standpoint is that Flipkart should be giving exceptional value. We will collect all the orders today and deliver them the same day and the next day. The industry will move in a way where there will be value players. The most significant change we anticipate in the grocery business is addressing single-item checkout, which still needs to meet consumer expectations. We are now focusing on creating a shopping experience where consumers are encouraged to add multiple items to their baskets before checking out. This is the core of our innovation journey: simplifying the list-making process. We aim to train consumers to transition from single-item purchases to more extensive basket checkouts.
Q2. What are the innovations that you are focusing on in the grocery space?
The first is the supply chain side of the business. By locating our fulfilment centres out of town in areas with significantly lower operating costs, we achieve considerable economies of scale. With one or two strategically positioned fulfilment centres, we can efficiently service an entire town. This approach contrasts with traditional retail, which requires proximity to consumers. Our lower operational costs translate into reduced business expenses, marking a significant innovation in our model. We also have advanced routing algorithms that optimise delivery routes to maintain high service levels. This ensures timely and efficient deliveries despite the fulfilment centre location. The other significant change we have implemented revolves around understanding evolving customer expectations. Initially, we believed that offering value alone would suffice. However, we now recognise that grocery customers need more, especially those creating large baskets. Therefore, we have pivoted our business to focus on providing groceries during convenient times—before or after typical working hours. In major cities, we now offer delivery slots from 7-10 AM to 7-10 PM and slots throughout the day. We have also invested in technology and trained personnel to enhance the customer experience. For instance, with our open-box delivery innovation, customers can return items they are not satisfied with at the doorstep and receive an immediate refund. This relies on our trained staff and advanced tech infrastructure to ensure smooth operations. To facilitate this, we expect customers to be at home during delivery, reducing any potential issues. These innovations have been live in select cities for the past few days and will soon be expanded to additional locations.
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Q3. How big is the grocery category becoming for Flipkart?
The grocery category is one of our strategic focus areas. Grocery shopping is a routine necessity, and offering a robust selection of grocery items and regular engagement helps foster customer loyalty and encourages e-grocery business. Grocery is a core category for customers who return to our platform consistently. The e-grocery category leverages the habitual nature of grocery shopping to build a more loyal and active customer base. We are committed to growing this category. The entire e-grocery industry has low penetration and is still developing sustainable models that effectively address consumer needs. This represents a significant journey, as no company has achieved dominance. Though our grocery business is performing well, we are in the early stages of understanding and meeting our customers' evolving demands. This category is essential for Flipkart to serve the growing needs of millions of its customers. Grocery would be one of the highest-growing businesses on Flipkart.
Q4. What are your plans to scale up this category?
We are already representing more than 200 towns and cities currently. This would be the biggest e-grocery footprint. When I say expansion, it would be how do we sell to those customers better? I already have a supply chain and I’m riding on top of it. We will penetrate deeper into existing locations. We will add new pin codes when we see that there are pockets of demand where we need to put in more assets in terms of our warehouse. We would have invested in almost 7 to 8 big warehousing facilities in the country in the past 8-10 months. We will continue to do so as the demand arises. My ideal design is that customers should be able to order today, get it either today or tomorrow and then expand that to pan India.
Q5. But 15- to 20-minute delivery provided by quick-commerce layers like Blinkit, Zepto, and Instamart are taking a major portion of the sales of products away from players like Flipkart and Amazon. How do you see the growth of quick-commerce?
Our insight is that there is space for everybody. Convenience players are doing well. Value-based customers have also made their place and we are already seeing that. Convenience players are solving for speed. When somebody claims that they can give you products in 12 minutes, someone else will say they will do it in 9 or maybe 8 minutes. A couple of years back, a lot of people said that this model of delivery in 12 minutes would not work. But in the next 2-3 years, we've already seen that it works and there's a lot of demand. The design which we follow is not similar. But we also ensure that Flipkart grocery reaches every pin code in the country. I think, today the demand for 15-minute or 45-minute delivery doesn't come from every pin code. It is limited to the metros today. I think there is a possibility for the co-existence of both quick-commerce and next-day delivery models.
Q6. Do you see Flipkart launching quick-commerce services?
There is work happening in the background and we can say more about it in July or August. Our original grocery goal was to reach out to every pin code in the country. The demand for quick delivery is not coming from every city. It is coming from very limited pin codes. We have a grocery supply chain, and that makes it easier for us to come up with something like this. Based on the customer's understanding, we will be taking that call. Flipkart also has other businesses as well and we can cross-leverage our resources. We are still exploring the opportunity of quick commerce. There is no fixed timeline.
Q7. What are the challenges that you're seeing in the grocery sector?
The biggest challenge for grocery stores is to incentivise the customer to search and add 15 to 18 items or 20 items in one sitting and then check out the cart. That behaviour is radical in metros or among the so-called power users of e-commerce. But how do you do this for the entire India? That's the biggest challenge here. And my team and I are productively trying to solve it.
