Despite Nearby failure, Flipkart to scale up food delivery

Flipkart is preparing to scale up its business-focused food delivery arm, after nearly a year of testing waters that have proved to be choppy for a number of startups.

The cautionary signboards aren't lost to India's largest online marketplace but it seems to be weighing the potential advantages of developing expertise in hyperlocal delivery given its extensive consumer-facing business, as well as of optimising its logistics arm, The Economic Times, reported.

Flipkart began piloting its food-delivery business in Bengaluru in March, leveraging the technology it had built for its grocery delivery business, Nearby, that it had shuttered the prior month. It provides Ekart personnel and freelancers to other businesses to deliver food to consumers.

"Food is a different ball game," said Saikiran Krishnamurthy, the head of Ekart. "The challenge of point-to-point delivery is you don't get economy of scale so you have to build a completely different level of technology and intelligence to be able to place your capacity intelligently and use it when needed."

Flipkart aims to fill about a thousand orders a day by March, up from about a few hundred daily orders currently, Krishnamuthy said.

Amazon India too has been evaluating the market and is expected to invest in a food delivery startup or venture into the business by itself. In September, it was reported that Amazon India had held discussions for an investment in consumer-facing food-delivery startup Swiggy .

Experts say ecommerce giants want a slice of all online consumption-driven segments, tapping every place where consumers are likely to spend their monthly disposable income. Amazon recently launched its quick-delivery service for daily essentials.

 Having a food-delivery business would also allow Flipkart and Amazon to optimise their logistics costs. Retail ecommerce deliveries taper through the week after peaking on Mondays because a majority of online purchases are made on Fridays or weekends, while online ordering of food peaks towards the weekends.

Also, ecommerce deliveries are usually done during 10am-1pm and 4pm-7pm while food deliveries peak during 12pm-3pm and 7pm-11pm.

Smaller business focused food-delivery startups have struggled, though. Roadrunnr, which is now Runnr, began delivering food to consumers directly after its acquisition of TinyOwl in June; Townrush has shut shop; Opinio has scaled down operations; and Shadowfax is maintaining its numbers from ecommerce deliveries.

It isn't clear if Flipkart will eventually want to deliver food to consumers directly, like Zomato and Swiggy do.