Flipkart eyes Groceries, to Renew Push in Online Furniture Business

7 min read
Flipkart eyes Groceries

In an attempt to outdo global giant Amazon in a burgeoning Indian market, India’s top e-commerce player Flipkart plans to move into the online groceries business, as well as make a renewed push in the online furniture business. These twin moves are being seen as efforts to expand Flipkart’s product portfolio.

Binny Bansal, Flipkart’s CEO told Reuters in an interview that the home-grown e-commerce player plans to begin experimenting with grocery sales next year i.e. 2017, and then scale up operations over a three-year period. It must be noted here thatAmazon has already begun to pilot grocery sales in select Indian cities and is looking forward to expand its product portfolio across the spectrum. In the same interview, Bansal also stated that Flipkart, which is backed by Tiger Global Management and Accel Partners among others, has cash reserves to last up to three years and that the company looks to raise money when the funds are available rather than when they are needed most. An IPO, therefore, might be in the offing.

Bansal was also quoted as saying,”There’s definitely room to build a profitable grocery business, but it’s hard. That doesn’t mean it’s not possible, but it’s hard.”

More and more people in India, a country of over 1.2 billion people, are logging on to the internet to buy anything and everything ranging from clothes to smartphones and toys to even food items, making its e-commerce market one of the world’s fastest growing and certainly the most lucrative. Thewealth management division of Bank of America,Merrill Lynch expects to see the value of goods sold online in India jumping tenfold to $188 billion (roughly Rs. 12,81,110 crores) by 2025. This impressive figure is what is driving other major players to the Indian market.

Earlier in 2016, Flipkart-owned fashion portal Myntra bought rival Jabong for $70 million (approximately Rs. 471 crores) in an all-cash deal, to create India’s largest online fashion retailer.This was Flipkart’s second big purchase in the world of fashion retail after it had acquired Myntra in 2014 in what was the biggest e-commerce deal at that time.Bansal stated that although fashion will remain Flipkart’s bestselling category for the next few years, he sees online groceries as having the potential to grow as big as fashion and electronics in the next six to eight years.

Bansal went on to state that Flipkart is also eyeing to make deeper inroads in the online furniture space. Indian websites such as Urban Ladder, Pepperfry and Furniture Bazaar have just begun to fuel the demand for online furniture sales in India, a country where many still prefer traditional carpenters and local stores. That very mindset is both a challenge and an opportunity for all major and newer players. Flipkart currently does sell furniture but plans to relaunch the store in a new avatar in about three to four months and add more variety to choose from.

“You will see more furniture in three-four months. We’re ramping up our selection and experience as well. We are basically building capabilities for furniture,” Bansal said, adding that Flipkart aims to provide furniture assembly services that are key to making headway in this largely untapped segment.

Flipkart would also consider going public in two to four years, Bansal said, adding that the company would consider listing either in India or overseas. An IPO, like we mentioned, is not out of the question. “What that strategy means is that we are constantly talking to investors and partners who are interested in investing.”, said the CEO. Reuters had reported in September that global giant Wal-Mart Stores was in talks to buy a minority stake in Flipkart, thereby potentially pitting it against global competitor Amazon.

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