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Flipkart’s new big strategy is to cross-sell its services — as well as its customers — to its biggest clients. Chief\nExecutive Binny Bansal has stitched together a plan to cross-sell\nFlipkart’s commerce, supply chain and advertising services to its\ntop-selling merchants and deep-pocketed brands such as Samsung . He\nalso wants to monetise Flipkart’s registered customer base of 75\nmillion by selling insights to these merchants and brands on who and\nwhere the top-paying buyers are and what kind of products they want.
“We\nare focussing on cross-selling,” Bansal, who took over as CEO in\nJanuary, said in an interview last week. There is a “lot of overlap. We\nhave seen brands using our services from across the board. For example,\nSamsung is using our advertising platform, they sell on Flipkart, and,\nhopefully in the future, we will power their supply chain”.
Smartphone\nbrands Samsung and LeEco have spent sizable portions of their marketing\nbudgets on Flipkart for the product launches of their latest handsets,\nalso opening brand stores on the platform. Bansal also wants to\nestablish Ekart and Flipkart’s payments business as independent brands\nfocused on business clients.
He said in the interview that he\nexpects Ekart and Flipkart’s fashion website Myntra to become\nprofitable first, while the core commerce business at Flipkart and\npayments will need more scale to start making money.
The new\nstrategy, if successful, will help Bansal prove to investors that\nFlipkart has a business model that can stand on its own by generating\ncash flows from Ekart and the advertising business by next year. While\nFlipkart has more than $1 billion in the bank, it needs to keep\nreplenishing its war chest to fend off an increasingly aggressive\nAmazon.
“The focus (on the seller-side) is on large brands\nthat have the deep pockets to pay and the intent to reach scale,\ncollect data and better their product portfolio in an efficient\nmanner,” a person directly familar with Bansal’s plan said, declining\nto be identified. On the customer-side, the focus is on offering the\n“best-quality goods at the lowest cost in the least amount of time”.
Flipkart\nhas already begun doing this in categories such as television.\nOnline-focused television brands Vu Technologies and BPL, among\nFlipkart’s top three brands in the category, sell highly competitively\npriced sets, leveraging the online platform to overcome distribution\ncosts.
ET reported on April 5 that Flipkart was working\nclosely with its top sellers, who are expected to account for 60-80% of\nthe sales on the platform.
This will help Flipkart comply with\nrecent regulatory guidelines on foreign direct investment in ecommerce\nthat bar a single vendor from accounting for more than 25% of the sales\non an online marketplace.
WS Retail, in which Flipkart\npromoters owned a stake till 2012, is estimated to account for more\nthan 25% of the sales on the marketplace as most of the exclusive\nmerchandise is currently sold through it.
Flipkart is also\nrelying on brands to give discounts now, as the guidelines disallowed\nonline marketplaces from directly or indirectly influencing sale\nprices. ET reported on May 27 that Flipkart had asked brands to reduce\ntheir margins during its latest Big Shopping Days sale on May 25-27.
Experts\ntracking online retail in India said Bansal’s strategy would help\nFlipkart manoeuvre around the new policy and at the same time give more\ncontrol and information to brands. Leading brands have had a fractious\nrelationship with online retailers and in the past have objected to the\ndeep-discounting practices followed by these investor-backed ventures.
“Growing\nthe share of other merchants via the small merchant route in a\nfragmented market like India is extremely resource-intensive, and\navailability of both human resource and money is going to get even\ntighter than it is now,” said Devangshu Dutta, CEO of retail\nconsultancy Third Eyesight.<\/span><\/p>