Flipkart gives out Rs125 crore of loans to boost its seller base

Flipkart will disburse Rs200 crore around the festive season, October-November, to enable its sellers to provide quality products to customers

Flipkart has more than 90,000 sellers on its platform. Photo: Mint
Flipkart has more than 90,000 sellers on its platform. Photo: Mint

Flipkart Ltd has disbursed Rs.125 crore of loans to more than 800 merchants on its platform as the online marketplace seeks to expand its seller base.

Flipkart launched the Growth Capital programme, under which its offers collateral-free loans at 11.4% to merchants via partnerships with eight financial institutions, in July 2015.

The scheme has seen maximum adoption among merchants selling mobile phones, other electronics and fashion products, Flipkart said in a statement on Thursday. These categories account for a significant majority of its overall sales.

Flipkart has partnered with the likes of State Bank of India, Axis Bank Ltd, Yes Bank Ltd and alternative lending start-up LendingKart for the financing programme. The firm estimates it will disburse about Rs.200 crore by the end of the festive season, around October- November.

“Considering the success of the programme and increasing demand for the initiative, we are estimating this to hit the Rs.200 crore mark by the end of this festive season. We are also planning to launch promotional offers with our lenders for the festive season in the following two months. This will definitely enable our sellers to grow their business and provide quality products to millions of customers shopping on the platform,” said Anil Goteti, head of marketplace at Flipkart,

Flipkart has more than 90,000 sellers on its platform. It plans to shift a majority of its sales to a select group of third-party sellers to regain its once-vaunted customer service levels.

That’s a significant departure from its strategy last year, when it attempted to have tens of thousands of sellers generate most of the business on its platform, Mint reported on 5 April.

Flipkart has been working closely with some existing sellers on its platform to equip them with the skills to manage a large number of orders. The firm plans to accumulate up to 100 such merchants, including new ones, over time. The company wants these sellers—along with WS Retail Services Pvt. Ltd, Flipkart’s largest supplier—to generate anywhere between 60% and 80% of its sales eventually.

The company has also identified at least four large seller entities that will help it comply with two potentially troublesome regulations that bar online marketplaces from offering discounts and cap a single seller’s contribution to overall revenue at 25%. Two of the four proposed sellers are Health and Happiness Pvt. Ltd and Consulting Rooms Pvt. Ltd. The other two sellers will be registered later this year, Mint reported on 11 July.

Flipkart’s rivals Snapdeal (Jasper Infotech Pvt. Ltd) and Amazon India have also been running seller financing programmes. The e-commerce firms negotiate with banks and other financial services firms to get favourable terms for their third-party merchants.

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