In a bid to compete against Amazon, India s Flipkart is now looking at adding new categories to its e-commerce platform. The company, which was launched in India in 2007, plans to move into groceries space and revamp its furniture business in the coming year. When it was launched in India, Flipkart s first products were books and today they have products across categories including apparels and home appliances. As the company turns 10 next year, Flipkart is aiming to struggle its way out of slowing sales and profits. Also Read - iPhone 11, iPhone XR up for grab with massive discount on Flipkart Big Saving Days saleAlso Read - Flipkart Big Saving Days sale begins: Pixel 4a, Realme X7, Samsung Galaxy F62, more on discount
Groceries and furniture are not new for Flipkart as the company has already experimented with the segments. Earlier this year, Flipkart shut down its groceries delivery arm Nearby owing to lack of demand. The project was launched last year in October but the app failed to garner the expected results. In terms of furniture, the company already has over 30,000 products in the category but wants to add more variety to appeal to the customers. Like Amazon, Flipkart also sells a variety of products ranging from apparels to books to electronics to home decor. But now, the company wants to again experiment with grocery sales a segment which is still untapped. “There’s definitely room to build a profitable grocery business, but it’s hard. That doesn’t mean it’s not possible, but it’s hard,” Flipkart CEO Binny Bansal told Reuters. Also Read - Flipkart Big Saving Days smartphone deals: Pixel 4a is star of the show once again
Flipkart aims to begin grocery sales in 2017 and aims to scale up operations over a period of three years. This is to squarely take on Amazon which has already started pilot grocery sales in select Indian cities. Currently, there are a handful of online stores which sell only groceries and daily perishable goods. In light of the current demonetization, services such as Grofers, BigBasket, Nature s Basket, and even local stores which have set up their websites have seen a spike in their sales. Similar to buying clothes or electronics, consumers in the urban areas and metros might prefer online stores for groceries to save time and efforts.
However, there are tremendous challenges to convince consumers to buy groceries online which is a daily essential need. One could exchange a piece of fabric online and wait for a late delivery, but for groceries, the need is timely and quality of utmost importance. According to reports, 60 percent of India s $525 billion retail market is spent on groceries and of that only one percent is taken up by online grocery sales. It is estimated that by 2020, the growth will not be exponential as the market will reach two percent, making it worth $10 billion.
In India, furniture market has largely remained offline one, but niche players such as Urban Ladder and Pepperfry have fueled the demand for online furniture and home decoration sales. These players have been able to break in the market with easy purchase along with easier exchange programs. Flipkart wants to make use of that opportunity and make deeper inroads in the online furniture space. ALSO READ: Amazon, Flipkart stop CoD orders after Rs 500, Rs 1,000 notes abolished
Flipkart introduced the furniture category back in 2015 and tied up with various sellers over the months. Now it wants to add more variety to its store and aims to offer furniture assembly services as well. You will see more furniture in three-four months,” Bansal said. “We’re ramping up our selection and experience as well. We are basically building capabilities for furniture.”
Although Flipkart is touted to be India s largest e-commerce platform and intends to take on the global role model Amazon, which in its three-year-stint has seen a huge growth in the country. Flipkart, launched in 2007, is yet to head for an IPO but that doesn t mean it has no plans to go public. Bansal says he is open to the idea and adds that the company could consider listing in India or overseas in two to four years of time. He said Flipkart, which is backed by Tiger Global Management and Accel Partners among others, has cash reserves to last up to three years and that the company looks to raise money when the funds are available rather than when they are needed most.
However, investors have a different picture to paint. In August this year, Morgan Stanley Institutional Fund Trust, one of the mutual fund investors in Flipkart, marked down its estimate of the company s valuation for the third consecutive time in the six months, bringing the valuation down at $9 billion. The company is also struggling to cut losses, which have mounted since last year. With the addition of the new segment, it will be interesting to see if Flipkart is able to repeat its success story and whether that will spell the end of niche players which have recently started their journey. ALSO READ: Flipkart introduces Everyday Essentials store to sell daily household items