India’s Flipkart is joining the retail food business as the e-commerce giant seems to extend its reach in the nation.

Flipkart sold a majority stake in the business to Walmart for $16 billion last year.

Flipkart’s Entrance In Food Retail 

It has registered an entity termed ‘Flipkart Farmermart Pvt Ltd in agreement with local laws.

Kalyan Krishnamurthy, Flipkart Group CEO, said in a statement that it would focus only on food retail.

The widespread business signifies an integral part of their efforts to promote Indian agriculture and food processing industry in the country. 

He further added that the company is currently operating with hundreds and thousands of small farmers for the business.

In an administrative filing earlier this week, Flipkart announced that it has approved to invest $258 million in this new venture. 

Krishnamurthy said the company had acquired approvals from the board to start the retail food business.

Indian publication Economic Times and outlet CNBC TV 18 first informed about the filing.

The Flipkart CEO stated that they are looking forward to investing more deeply in local agro-ecosystem, supply chain, and are working with multiple Farmer Producers Organisations (FPOs). 

They have made this decision to help increase farmers’ income and bring affordable, quality food for millions of consumers across the country.

The company has already committed to funding about $500 million in the course of the next five years, by building its label of food products and involve with third-party sellers. 

Walmart's flipkart enters food business in India | iTMunch

Flipkart’s Competition 

The announcement arrives as Flipkart’s chief competitor Amazon begins to increase its retail food business in the country. 

In recent years, Amazon India has built or started Amazon Now, Prime Now, and Amazon Fresh businesses in the country.

Food and grocery are compelling sections for e-commerce businesses as people purchase their grocery and perishable rations much more often than they purchase office supplies and devices. 

And the chance is big. 

According to an investigation firm Forrester, online food and grocery market remains notably small, estimating for just 1% of the total sales.

Indian laws allow e-commerce companies to sell food items straight to consumers. 

For other categories of things, e-commerce businesses run with third-party sellers.

For Flipkart, having the support of Walmart could show immensely useful as it scales its retail food business. 

The U.S. retail giant can help Flipkart with planning out the play for how it should source and manage the supplies and how to grow margins.

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