Has Amazon’s ghost started haunting Flipkart? It seems so. The pressure to become profitable fast has forced this Indian e-commerce startup to close unprofitable businesses. The company has decided to close down its grocery delivery division ‘Nearby’. It has come at a time when this Indian startup is facing tough competition from global e-commerce giant Amazon.
“’Flipkart Nearby’ was a piloted in select areas of Bengaluru.The experiment was a test for understanding efficiencies and operations of the hyperlocal business. The project has now run its course and the learnings from this pilot will now be used for future operations of the company.” Flipkart said in an official statement.
The friendly mobile supermarket had been launched in October last year. The $15 billion company had lost 2000 INR in the last financial year.
Another jolt came a few days ago when Amazon announced to become the number one e-commerce site in terms of traffic.According to comScore data, Amazon has 30 million unique visitors which is more than 27 million visitors of Flipkart.
The battle to capture the online commerce market has stepped up recently. All of these e-commerce companies have made huge investments in hyperlocal and supply chain aspects to win the war.
Flipkart’s decision has made one thing very clear that the business model of signing in Kirana stores and delivering goods from its own logistics is not a profitable model. Flipkart’s CEO Binny Bansal wants to give a message that it only wants to focus on profitable ventures.
The decision is also reflective of the growing problems in the hyperlocal space. Earlier this year, SoftBank backed Grofers shutdown its operations in nine cities. Similarly, PepperTap closed operations from 10 locations.
Perhaps, Flipkart has realized that it does not have the sufficient operational and resource bandwidth to operate in the thin margin extremely competitive hyperlocal space. However, it’s just the beginning.