Watch out, Big Basket: Amazon launches fresh fruits and veggies in India

Photo credit: condesign.

Swinging out at competitors in India, Amazon on Thursday launched a fresh fruits and vegetables category under its Amazon Now umbrella. It promises the same two-hour delivery for fresh produce that it offers for packaged daily staples since it launched in February.

Amazon Now only operates in Bangalore for now and is accessible through an Android app. In an email to customers, the company said it would tie up with popular Indian supermarkets to source fresh produce, in addition to the daily essentials it was already getting from them.

While it still looks like a pilot project, the move will put it in direct competition with specialist startups like Big Basket, and ahead of arch-competitor Flipkart, which was unable to scale its grocery business and nixed it in February.

Amazon did not respond to an email asking for more details.

Amazon’s announcement comes barely three days after the Indian government relaxed foreign direct investment rules in the country, including for the food sector. That had sparked off conversations of a potential US-style battle between Amazon and Walmart in the country. Both companies were either not allowed to hold inventories or sell food directly to customers under the previous set of rules.

The Economic Times quoted an unnamed Amazon official as saying that the company was “interested in sourcing and selling grocery, fruit, and vegetables online through its marketplace.”

“In this case, Amazon itself can act as a seller and need not rely on third parties. It works with farmers in the US under a program called Amazon Fresh and would like to replicate the model in India,” the person told the paper.

Grocery delivery has always been sticky ground for ecommerce companies in India – on paper, the country’s densely populated cities and poor infrastructure create the perfect market for online grocery shopping. But Indian neighborhoods have a long tradition of being serviced by local mom-and-pop stores. These accept orders over the phone, deliver free of charge, and even extend credit.

As a result, while China’s online grocery market – the world’s largest – is set to be worth almost US$180 billion by 2020, India has proven a tough nut to crack.

Amazon’s email to customers announcing the launch.

The puzzle has stumped everyone from Flipkart, Paytm, and Ola, to a bunch of other startups that either scaled back, closed operations, or closed shop.

Amazon’s grocery division hasn’t really taken the market by storm yet, and is confined to select neighborhoods. Thursday’s expansion will put the company decidedly in the turf of the one startup that seems to have cracked the code.