Flipkart CEO reveals how he is mobilizing a hyper-local network of kirana stores to dominate e-commerce in India and help parent-company Walmart on a global scale
Flipkart CEO Kalyan Krishnamurthy speaks at a conference.
- Flipkart, the Walmart-owned e-commerce giant based in Bangalore, India, previously had to compete with India’s thriving ecosystem of kirana stores.
- These hyper-local stores attract loyal consumers and serve as centers of commerce in many localities.
- Flipkart CEO Kalyan Krishnamurthy said that his company has partnered with thousands of kiranas for B2B services and delivery.
- “Ideally we would like to expand this partnership,” Krishnamurthy said. “The role of the kirana ecosystem plays in India is extraordinary.”
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Walmart just beat Wall Street’s expectations, thanks, in part, to a boost from its India-based e-commerce giant Flipkart. In its earnings release, Walmart specifically called out the “strong growth in net sales at Flipkart was helped by a record number of monthly active customers.” Walmart bought a controlling stake in Flipcart for $16 billion in 2018.
And one of the factors driving that swell of customers is Flipkart’s ongoing efforts to team up with India’s sprawling ecosystem of kirana stores, a type of retailer that was once seen as a potential impediment to the e-commerce company’s growth. Kiranas are small stores in India that sell groceries and other necessities. They are often owned by families and can serve as important centers of commerce in certain localities.
But the Walmart-owned e-commerce giant has now forged a close, multi-faceted relationship with a network of thousands of kirana stores, according to Flipkart CEO Kalyan Krishnamurthy. As of September, Flipkart had partnered with over 50,000 kirana stores in 850 cities across India.
In an interview with Business Insider, Krishnamurthy broke down the three main ways that Flipkart has leveraged its partnership with thousands of kirana stores across India.
First, Flipkart has amassed kirana stores as a key B2B customer base. Second, kirana stores serve as delivery partners for Flipkart, especially during India’s busy holiday season. And third, through the company’s new Flipkart Quick service products are picked up directly from kirana stores and delivered to customers, so kiranas act as a fufilment center.
“We would like to partner with the kirana ecosystem in every way we can,” Krishnamurthy said. “Ideally we would like to expand this partnership. The role the kirana ecosystem plays in India is extraordinary.”
Krishnamurthy said that kirana stores make up 80% of India’s retail ecosystem.
“And it continues to grow,” he said. “It’s not going to go down in importance in any way.”
Flipkart has long had its eye on the country’s expansive kirana ecosystem, as a result of that importance.
A 2018 Business Insider Intelligence report from Daniel Keyes noted that kiranas proved to be “a real problem for Walmart’s e-commerce efforts through Flipkart” thanks to their dominance. In many places in India, a highly diverse subcontinent, kirana stores serve as more a community center than a convenience store. Krishnamurthy said that further away from India’s larger cities, “the kirana ecosystem is way more than just a retailer to consumers.”
“They serve as lenders to the local communities,” Krishnamurthy said. “They play a role in the communities that goes much deeper than just supplying products to the consumer ecosystem. They provide employment. Sometimes they provide capital. They provide entrepreneurship opportunities.”
Krishnamurthy said that Indian consumers’ adoption of e-commerce has also soared. He said that 10 months ago, Flipkart was projecting to its partners that e-commerce would be $75 billion business in India by 2024. Nowadays, they are projecting a figure more around $100 billion. Krishnamurthy said that e-commerce penetration in many categories, especially grocery, remains low.
“The market is moving from people who were just trying out e-commerce two years back to actually being loyal e-commerce users,” he said. “We are just very excited with the opportunity that lies ahead of us.”