Walmart owned Flipkart to enter food retail business in India

Flipkart, an e-commerce business in India, is going into the food retail business in order to expand across the nation, says its company’s CEO, Kalyan Krishnamurthy, in a statement to TechCrunch on Tuesday.

The company sold the majority of its shares to Walmart for $16 billion in 2018 and has been registered as an entity under the name, ‘Flipkart Farmermart Pvt Ltd.’ in compliance with local Indian laws.

Krishnamurthy says that extending Walmart’s Flipkart into the retail food market is the company’s way of boosting Indian agriculture as well as the food processing industry there. He also added in his statement to TechCrunch that the company is already in the process of working with hundreds to thousands of small farmers.

Flipkart revealed in a regulatory filing early in the week that it has given authorization to invest $248 million in this new undertaking and has secured approval from the company’s board of trustees to go ahead and enter the food retail business. This filing was first made known in the Economic Times, an Indian newspaper as well as on the CNBC TV 18 outlet.

Krishnamurthy says the company is looking to accomplish several goals such as investing more into the local agricultural economic system and supply chain; working with the Farmer Producers Organisations (FPOs) made up of over a hundred thousand small farmers; working with the food processing industry in India; assisting in multiplying farmers incomes; and to bring affordable, quality food to millions of customers across India.

This announcement by Flipkart comes at the same time its chief rival Amazon is starting to expand its own food retail business in India as well. Amazon has committed to invest approximately $500 million over the next five years in order to forge its own private label food products and work with third-party sellers. Amazon has in recent years also begun or has established in India, Amazon Now, Prime Now and Amazon Fresh.

Although the online food and grocery market remains rather small in overall sales of just 1%, according to the research firm of Forrester, the opportunity for e-commerce business there is huge.

In India, laws allow e-commerce businesses to sell food items directly to consumers. All other categories of items sold by e-commerce business is done though third party sellers.

Forrester says that Walmart will provide significant assistance to Flipkart in planning out how the company should source and maintain the supplies and how to improve its margins.

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