Locked in an intense battle with Amazon, homegrown e-commerce major Flipkart is looking at re-entering the grocery segment that accounts for a significant portion of India's retail industry.
"Yes we will get into grocery... 80 percent of units bought in India is grocery... $400-600 million (roughly Rs. 2,583 crores - 3,874 crores) is grocery market, so we have to get into it," Flipkart CEO Kalyan Krishnamurthy said at a TiE event in New Delhi.
This will be the second attempt into the grocery segment for the Bengaluru-based firm.
However, following a weak response, Flipkart closed the business a few months later.
Flipkart's rival Amazon India has launched its grocery ordering app, Amazon Now last year. The app is now available in four Indian cities including Bengaluru, Delhi-NCR and Mumbai. Amazon plans to invest around $500 million in e-retail of food products in India.
"There are three models for grocery. One is a daily purchase, the average selling price (ASP) there is very low at about Rs. 300-400. Then there is a weekly business model, which is a bit higher. Thankfully, 60-70 percent of the market is the third one which is monthly basket where average is about over Rs. 2,000. With those, it's a very sustainable business," he said.
As per industry reports, the online F&G delivery market is estimated to be around $600 million in India and pegged to touch $5 billion by 2020.
Talking about acquisitions, Krishnamurthy said the company is looking at targets for enhancing capabilities.
"We will look at M&A, size doesn't matter. What we are looking at is capabilities. A lot of business we acquired over time were actually small," he said citing examples of PhonePe and Jeeves.
Flipkart, which has made big-ticket acquisitions like Myntra and Jabong as well, is believed to be in fray for acquiring its smaller rival Snapdeal.