As India’s quick commerce space heats up with a slew of online grocery and hyperlocal startups announcing aggressive plans to expedite their deliveries, e-commerce giant Flipkart, together with parent company Walmart, is strengthening its e-grocery play with a USD 145 million check for Ninjacart. It is the largest investment deal ever made by Flipkart and the largest in the country’s agritech space.
Bengaluru-based Ninjacart sources fresh produce from over 100,000 farmers from 150 villages and delivers it to businesses within 12 hours—which is faster than traditional players—using its network of collection centers, fulfillment centers, and distribution centers. The investment is expected to strengthen Flipkart’s supply chain for fresh fruits and vegetables—a fast-moving, high-demand category that constitutes a crucial part of groceries and plays an important role in increasing consumers’ stickiness for online grocery businesses.
“With this investment, we are further able to strengthen our grocery footprint and offerings as consumers across the country throng to e-grocery for quality and affordable options in the fresh (produce) category,” Kalyan Krishnamurthy, CEO of Flipkart Group, said in a statement announcing the deal.
This investment will further accelerate Ninjacart’s journey towards building technology and infrastructure to organize, empower and enhance the lives of millions of farmers, resellers, retailers, consumers, and supply chain participants, Flipkart and Ninjacart said in a joint statement.
According to Thirukumaran Nagarajan, co-founder and CEO of Ninjacart, the funds will be used to build teams and scalable tech platforms to organize and grow the network. Flipkart first came onboard Tiger Global-backed Ninjacart’s cap table after leading an estimated USD 10 million round in December 2019 when it started setting up its delivery and supply chain operations for a fledgling e-grocery business. The deal was followed by another USD 60 million investment in Bengaluru-based hyperlocal delivery startup Shadowfax. While Shadowfax’s investment was aimed at making faster same-day deliveries to boost its grocery platform Supermart, it sought to leverage Ninjacart to procure fresh produce directly from farmers.
Flipkart and Walmart topped up their investment in Ninjacart in October 2020 with a USD 30 million round. The new USD 145 million funding from the duo reportedly values Ninjacart at USD 750-800 million from the current USD 500 million.
10-minute deliveries
Over the years, Flipkart has made quite a few attempts to level up its e-grocery business.
Flipkart launched its grocery service Supermart in May 2018, two years after shutting down its first grocery delivery service, Nearby. However, it struggled to expand the service and seize a bigger pie of the e-grocery market, which witnessed a rapid expansion since COVID-19 hit India in March 2020. The firm then rolled out a new hyperlocal service vertical called Flipkart Quick in the middle of last year that delivers fresh produce, household items, mobiles, and electronics in 75–90 minutes to compete with food delivery Swiggy’s express grocery service Instamart and Google-backed hyperlocal startup Dunzo.
One and a half years later, express grocery delivery is fueling the growth of quick commerce—wherein companies pledge to deliver goods within 10–30 minutes after an order is placed. Quick commerce has been on the rise in the South Asian nation since late last year, on the back of the wide adoption of internet-based services and millions of urban millennials’ willingness to pay a premium for convenience.
The grocery and quick commerce space has now emerged as a new battleground for e-grocers, e-retailers, and hyperlocal players. Food delivery service Swiggy and hyperlocal service Dunzo have ramped up investments to ensure order delivery within 30 minutes. A new entrant, quick commerce startup Zepto, which was founded earlier this year with the promise of 10-minute deliveries, is moving fast to corner the market after recently raising USD 60 million in its first round of funding at a post-money valuation of USD 225 million.
Grofers has become the latest company to chase after quick commerce to fuel growth. On Monday, the eight-year-old Gurugram-headquartered rebranded as Blinkit to underscore its recently found focus on quick commerce. Until last year, it was focused on value over convenience, delivering orders in a few days. But it changed tack this year after landing a USD 100 million check from Zomato in June 2021 and began focusing on fresh produce and grocery delivery in ten minutes.
“We learned a lot as Grofers, and all our learnings, our team, and our infrastructure is being repurposed to pivot to something with staggering product-market fit—quick commerce,” said Albinder Dhindsa, CEO and founder of Grofers, in a blog post.
BigBasket is also reportedly looking to launch an express delivery service, BB Now, which will take groceries to customers’ doorsteps in 10–20 minutes, this month.
On the other hand, Amazon, Flipkart’s arch-rival in the overall e-commerce play, has sharpened its focus on grocery delivery, including fruits and veggies, in major cities within 30–120 minutes under its service Amazon Fresh since early 2021. Meanwhile, Reliance’s e-commerce platform, JioMart, which started as a grocery delivery platform last year and gradually expanded to apparel and personal care segments, also takes a couple of days to fulfill orders.
This means, Flipkart, Amazon, and JioMart—the more established Indian e-commerce players—are effectively lagging behind their smaller competitors in the e-grocery and quick commerce race in the country. The only leverage these e-retailers have in the segment over e-grocery platforms and hyperlocal services is their wider reach across hundreds of cities.
Flipkart is leveraging Ninjacart as it eyes a bigger pie of soon-to-be USD 18 billion e-grocery market and estimated USD 5 billion quick commerce segment. Tata-owned e-grocer Bigbasket is a category leader in India, partially because it mastered the art of fresh produce delivery, despite it being a capital-intensive process given the complexity of the grocery market and a broken supply chain in India.
The fresh produce category can become a significant differentiator for Flipkart, as well as giving it control over the supply chain through Ninjacart.
Currently, Flipkart offers groceries in 1800 cities and towns and aims to take its offering to 2,000 more towns by mid-next year. Fresh fruit and vegetables will be an integral part of the expansion, with the company investing in technology capabilities to ensure the highest and most stringent quality checks for the end consumer, Flipkart added.
The e-commerce giant had an 11% market share in the USD 3 billion e-grocery market in the financial year ended March 2021, as per the PGA Labs. Bigbasket commanded around 37% share, while Amazon India, Grofers, and JioMart held 15%, 13%, and 4% market shares, respectively.