On its five-month-old social commerce platform Shopsy, Flipkart announced that it had included grocery as a category. Flipkart is pursuing social commerce for online grocery when DealShare is a major participant and Meesho and Udaan are experimenting with Farmiso and Price Company, respectively.
On Shopsy, groceries will be offered in 700 cities with 5,800 pin codes. It would offer 6,000 products in over 230 categories, including staples, fast-moving consumer goods, and other dry groceries, which will be comparable to the breadth and range offered by Flipkart Grocery.
"Grocery is a key consumer need, and we are committed to making e-grocery affordable for consumers and sellers alike," said Prakash Sikaria, senior vice president (growth) at Flipkart.
The news follows Flipkart's announcement that it will invest $145 million in Ninjacart, a fresh produce supply chain company, alongside Walmart.
"We have been working on reducing the cost of delivering groceries over the last few months," Sikaria said. "Our core focus will be to bring benefits of community commerce to Indian consumers."
Individuals, primarily local entrepreneurs with other occupations, can use the Shopsy app to become social media resellers of multiple Flipkart vendors without investing any money. They can share catalogs with potential consumers via social media and messaging platforms, place orders on their behalf, and profit from sales. Shopsy is aiming for an annualized gross merchandise value (GMV) run rate of roughly $1.5 billion by next year, according to sources familiar with the company's ambitions. The annualized sales run rate is a forecast of future sales based on the previous month's sales.
Flipkart said when it started Shopsy in July that it would sell products in a variety of categories, including fashion, beauty, mobiles, and home, but not grocery.
Shopsy's foray into the grocery market comes when the social commerce model is witnessing growing activity. DealShare, sponsored by Tiger Global, has been a key player. In contrast, Meesho, backed by SoftBank, has doubled down on groceries through Farmigo. Udaan, a B2B e-commerce company, has also entered the area through Price Company, as ET has reported. Shopsy was already a competitor in the social commerce arena across categories. Meesho has expanded into the consumer-focused eCommerce space. Flipkart would employ its fulfillment centers in Ahmedabad, Bengaluru, Chennai, Coimbatore, Delhi, Hyderabad, Kolkata, Lucknow, Mumbai, Patna, and Pune to scale to 700 cities.
The Following Billion
Unlike traditional e-commerce, which involves the buyer and the seller, social commerce involves a third party termed a reseller. They (resellers) typically acquire things in bulk and resell them in their local communities via social media sites such as WhatsApp and Instagram, where they share curated catalogs. This methodology enables eCommerce businesses to easily reach the next 100-150 million people. Resellers on the Shopsy platform will receive a fixed 5% commission margin. Marketing and logistics are the two most expensive aspects of running an eCommerce business in a small town. As a result, the reseller model aids in lowering customer acquisition costs.
"We believe this model can solve challenges such as small-ticket buying, assisted buying, instant delivery, etc., leveraging resellers who act as a conduit between us and end-users," Sikaria said in a statement on Tuesday.
As head of Flipkart's growth charter, he will get additional responsibilities in the firm from next year, as ET reported earlier this month.
Flipkart launched Shopsy in July, with around 250,000 resellers to onboard 25 million by 2023. The move was perceived as a response to Meesho's aggressive expansion into tier-II and tier-III cities. Meesho has stated that their consumer eCommerce division generates 80 million orders per month. In September, it raised $570 million, backed by Fidelity Management and Research and Facebook co-founder Eduardo Saverin's B Capital Group, bringing its valuation to $5 billion. Following the release of the funds, the firm announced that Farmiso would be doubling down on the grocery segment.
DealShare, which focuses exclusively on groceries, raised $144 million in July and hoped to reach $700 million in annualized GMV (gross merchandising value) this month. In September, ET revealed that it was in talks with investors to close a new round of funding. While businesses like Swiggy's Instamart and Dunzo have chosen to cater to metro city customers by promising them the ease of 10-minute grocery delivery, social commerce platforms are attracting new buyers by offering better costs, albeit with a day or two waits. This is accomplished by bulk purchasing by the community.