Scaling up grocery and Shopsy will be priority, Flipkart CEO says

Bengaluru | Mumbai: The Flipkart Group will scale up verticals like grocery and hyperlocal deliveries along with its value-focused platform Shopsy, after having invested in these verticals over the past year or so, CEO Kalyan Krishnamurthy told ET in an interview.

This, when Indian ecommerce has seen the entry of younger players, a deluge of investor capital and for the first time in many years incumbents like Flipkart and Amazon being challenged.

Krishnamurthy said the Bengaluru-based company, majority owned by US-based retail behemoth Walmart Inc., will double down on these bets along with pushing healthcare and travel where it made strategic investments last year, instead of diversifying further this year.

The last two years have been primarily about launching new products, but in 2022 “we will scale all of these businesses”, he said. “Shopsy, grocery, travel and healthcare, these are big and we made massive investments… We want to really get these to the next level of growth and pull in customer adoption over the next 12-18 months…”


In July last year, Flipkart raised $3.6 billion at a valuation of $37.6 billion, in what was its maiden external financing round since it was acquired by Walmart in 2018. Besides its own fundraise, the etailer has had a busy year making multiple investments and acquisitions. The company is estimated to have spent around $400-500 million on M&As over the last 12-18 months as it bought out travel booking site Cleartrip, online pharmacy SastaSundar and most recently invested along with Walmart $145 million into Ninjacart, a supply chain startup for fresh produce.

On its IPO plan, which ET has reported is planned for this year, Krishnamurthy said, “We have not had a discussion with the company board on the IPO so far and are not ready to share a specific timeline.”

“But ecommerce in India is yet to happen. The penetration of categories like grocery—which is 70% of commerce in India—is probably 1%; that has to go up to 5-10%. Value segment has to open up and we have entered new categories like travel and health…The way we think about this is that we need to continue driving adoption and these businesses and a natural outcome of this would be an IPO.”

Competition in ecommerce
But competition is rife in some of these spaces. Flipkart's Shopsy, which was launched in July last year, has SoftBank-backed Meesho to fight out along with players such as Tiger Global-backed DealShare and Singapore-based Shopee which entered India. In the so-called ultra-fast delivery segment, Flipkart Quick is up against the likes of Swiggy’s Instamart, Blinkit (formerly Grofers) and Mumbai-based upstart Zepto.

Krishnamurthy said the competitive landscape in the ecommerce sector has not changed much in the past few years despite the entry of younger firms.

“We don’t believe the new players are playing with the level of capability and depth needed for ecommerce in India. It doesn’t matter how much capital you bring to the table, that’s not the way you can win ecommerce in India,” he said. He added that these companies were growth hacking instead of building capabilities deep supply-chain integrations and end-to-end commerce technology.


While Krishnamurthy did not name any specific companies, Meesho, which raised $570 million in November and is valued at $4.9 billion, has emerged as a key player in the social commerce space where selling is facilitated through platforms like Facebook and WhatsApp. The company recently moved away from group buying to go direct to consumers like Flipkart and Amazon do.
Krishnamurthy said there is no such thing as “social commerce”.

“I don’t know what that means. Commerce means right selection, right value, and right services. Social is a way of making this value proposition more discoverable in a relevant way, amplifying it. Shopsy is that…”

He also claimed that Shopsy had become a leader in the value ecommerce segment in a short while and continues to grow more than 20-30% month-on-month basis.

Quick delivery
Commenting on the 10-15-minute delivery proposition being offered by various companies and the rush of venture capital money into the space, he said, “I don’t think that’s (15-minute delivery) the right long-term customer model. We would look at a more sustainable business which offers it in 30-45 minutes with good value and selection. That's the way we look at the convenience business rather than force-fitting a consumer need which is actually not there in the market.”

Ultra-fast commerce has attracted millions of dollars not only in India but globally as well, with startups like GoPuff, Gorillas and Getir snagging eye-popping valuations in the last year. Krishnamurthy added that even in developed markets including the US and Western Europe, customer sophistication had not reached the point of demanding products in 15 minutes.


So why is this slug of capital being poured in? “I think there is probably a view that new customer habits can be created and moats can be built. But to build something like that, major investments will be needed.”

Another issue with the 15-minute delivery model is that one has to choose between offering fast delivery or a wide selection and great value, he said.

Flipkart Quick, which was launched as a 90-minute delivery service, is present across 14 cities and the company plans to take it to over 200 cities by 2022. Similarly, Flipkart will also look to expand its fresh vegetable and fruits business under the broader grocery category which is currently operating in Bengaluru and Hyderabad.

“We announced the investment in Ninjacart—it’s a deep strategic partnership. We also have partnerships with several farmer producer organisations and will launch Fresh in more cities over the next 6-12 months,” he said.

Top-deck churn at Myntra
Krishnamurthy said Myntra, the group’s online fashion retail platform, has only scratched the surface in the online branded fashion space. Myntra will continue to run independently under the new management with its own strategy, targeting its customer segments. “We are going to invest in it heavily and grow it disproportionately, the new team is very enthusiastic,” he said.


Late last year, Flipkart announced changes in Myntra’s leadership with its former CEO Amar Nagaram leaving the firm to start his own venture for which it is raising venture capital. An old Flipkarte executive, Nandita Sinha was appointed as the new CEO, effective January 1, 2022.

According to Krishnamurthy, Myntra has continued to grow over the last 12-18 months except when the segment was hit severely by the Covid-19 pandemic. In the branded fashion category, we would have gained market share rather than losing it, he said.

The online fashion industry has witnessed the rise of Reliance Industries’ Ajio over the last two years which is challenging Myntra’s leadership in the segment. Flipkart runs its own fashion business but it targets a different set of consumers while Amazon India’s fashion business is yet to get significant traction in the category. “We believe competition is necessary and it’s actually healthy. The onus of market expansion does not just fall on one player,” Krishnamurthy said while talking about the increased competition in online fashion.

Covid-19 Impact
Even as the Omicron variant of the Covid-19 virus starts to spread across the country, Krishnamurthy said Flipkart witnessed a substantial pandemic-induced acceleration in consumer adoption last year and in 2020. According to him, new users came to the digital fold and existing online shoppers were a lot more active on the ecommerce platform.

“They (existing shoppers) are transacting across multiple categories. Earlier, there were a bunch of users who would come and shop in a particular category but their basket size has now expanded,” he said, adding that this was a common thread across different sets of shoppers on Flipkart.

Krishnamurthy said it's still unclear how the Omicron variant will play out in India. “I think we have become a lot more prepared to handle emergency situations and little bit of volatility arising from the virus,” he said, adding that the pandemic has also led to a lot of flexibility to respond to changes quickly due to developments triggered by Covid-19.