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Abu Dhabi, UAEWednesday 19 September 2018

Flipkart deal set to spark e-commerce boom in India

But established domestic players may feel the force of Walmart power

A Walmart shopping cart. Its acquisition of Flipkart is likely to accelerate e-commerce in India. Kamil Krzaczynski/Reuters
A Walmart shopping cart. Its acquisition of Flipkart is likely to accelerate e-commerce in India. Kamil Krzaczynski/Reuters

The online grocery market in India is expected to boom and become increasingly competitive because of Walmart's takeover of Indian e-commerce company Flipkart, analysts say.

“We are likely to see a disruption that will come with the Walmart-Flipkart partnership,” says N Chandramouli, the chief executive of TRA Research, an advisory firm based in Mumbai. “Due to Walmart’s strong base in grocery, this entity is also likely to go very aggressive on selling grocery products online very soon, and apart from giving Amazon a run for their money in this area, online grocery retailers like BigBasket, Grofers are likely face the brunt of it.”

Bangalore-based BigBasket is India's largest online grocery company, selling thousands of items from onions to Indian sweets, delivered to the doors of 8 million customers across 25 cities in India.

The company, launched in 2011, in February raised $300 million in a fresh round of funding led by China's Alibaba Group, with UAE-based Abraaj Capital also participating in the investment.

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Ajay Srinivasan, a director at Crisil Research, says he expects to see a “thrust” in the online grocery sector in India following the Walmart deal, describing it as “the fastest growing segment in the e-retail space”, with projected annual growth of 65 to 70 per cent to reach 100 billion rupees (Dh5.44bn) in revenues by 2020.

The rise of India's online grocery market is being driven by the country's young demographic and changing culture. Households in urban India where, increasingly, men and women are both going out to work, means there's less time for picking up groceries in local markets. Vast supermarkets are not ubiquitous in India, as they are in many other parts of the world, so this also adds to the appeal of shopping for groceries online.

Amazon also has big plans for growing the grocery segment of its business in India, expecting groceries and household products to make up more than half of its business in the country in the next five years. The US e-commerce giant has set its sights on launching its fresh grocery delivery service in India.

"I would not speculate on when we would launch AmazonFresh but, absolutely, if you ask me the next five years of vision - from your avocados to your potatoes, and your meat to your ice cream - we'll deliver everything to you in two hours,” Amit Agarwal, Amazon's India head, told Reuters last month.

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