Flipkart looks to expand FPO tie-ups with focus on value-added, premium produce

Bengaluru: Flipkart is betting that closer links with farmers and better demand planning can help it scale one of quick commerce's most operationally challenging categories: fresh produce.

The e-commerce company is deepening partnerships with farmers and farmer producer organizations (FPOs), while investing in sourcing infrastructure and demand planning to reduce wastage on its quick-commerce platform Minutes. It also sees scope to expand premium offerings and introduce private labels, Kunal Gupta, senior vice-president of Flipkart and head of Flipkart Minutes, told Mint.

“Our focus is on being closer to agricultural production centres so that we can source the freshest produce,” Gupta said.

Flipkart works with 25 FPOs and more than 7,000 farmers directly across India. In Pune, one of Minutes' key markets, around 90% of its fruits and vegetables (FnV) procurement comes directly from farmers and farmer partners, Gupta said.

Fresh produce offers margins of 20-40%, depending on the item, according to Satish Meena, analyst at market research firm Datum Intelligence. Leafy vegetables and exotic fruits tend to command higher margins, while staples such as onions and tomatoes are at the lower end. But unsold inventory can quickly turn into wastage, and maintaining consistent quality across batches remains a challenge.

“There is a massive opportunity in the category, but the key is to manage wastage and ensure consistent quality,” Meena said.

The push comes amid intensifying competition in India's quick-commerce market, with platforms looking beyond metro cities for growth. According to Datum Intelligence, Blinkit led the market by order volume in September with a 40.2% share, followed by Zepto at 23.3% and Swiggy Instamart at 13.6%. Flipkart Minutes had an 11% share, ahead of Amazon Now (7.4%) and Tata-owned BigBasket (4.6%).

Farm-to-platform network

Flipkart's strategy centres on connecting farmers with organised retail demand through local sourcing partners. Its partnership with Agromol Ventures, which works with farmers around Pune, illustrates the model.

Agromol collects produce from nearby villages and handles sorting, grading, quality checks and packing before dispatching it to Minutes' fulfilment centres. Its six facilities across Maharashtra also have temperature-controlled storage rooms maintained at 2-10 degree Celsius.

Flipkart currently has around 37 exclusive collection centres across the country, Gupta said. While it will invest in more facilities where required, exclusivity is not a priority.

“We share demand projections and planning requirements with our partners who work closely with farmers to ensure they have better visibility into market demand, including the quantities and pack sizes of vegetables required. We can make this happen even without exclusive partners,” Gupta said.

Produce is checked at collection and fulfilment centres for size, colour and freshness, with items failing to meet specifications rejected. Flipkart aims to receive produce within 60-90 minutes of harvest, he added.

The model also requires farmers to shift towards demand-led cultivation rather than growing produce first and subsequently looking for buyers. Agromol chief executive Amol Ghenand told Mint that farmers are trained in practices such as integrated pest and nutrient management.

“We have been working with farmers for the last two years to help improve the quality of their produce and reduce wastage. There is still a long way to go in minimising wastage and improving produce quality across the supply chain, particularly in a year when the country has seen drought conditions,” Ghenand said.

However, competing online platforms follow similar sourcing models, making fresh produce difficult to differentiate, Meena said.

The premium bet

Flipkart is also looking beyond conventional fruits and vegetables to higher-value and organic offerings. Gupta said organic products are growing faster than the broader FnV category on the platform, although from a smaller base. He estimated that the overall category was growing at around three times, compared with 10 times for organic produce.

While demand remains stronger in metro markets, Gupta sees potential in tier II markets and beyond. Blueberries, avocados and raspberries, once less commonly consumed by Indian households, are finding a wider customer base, he said.

The company also sees scope for private labels in fresh produce, though it has no specific launch plans to announce. Gupta said there was a “market and scope” for them. Flipkart already runs Classic by Flipkart for staples such as pulses and grains, and recently launched Pykd for gourmet snacks.

But premiumization will have to co-exist with the price sensitivity of Indian consumers, for whom staples such as potatoes, onions and tomatoes remain everyday essentials.

“Both premium and value-driven consumption patterns will co-exist,” Gupta said.

The reporter was at Flipkart’s facilities near Pune for reporting at the invitation of the company.