Flipkart may set up offline stores

E-commerce firm Flipkart’s online-to-offline strategy will target small cities with limited access to the Internet


Flipkart is seeking to double its current user base at a time when the broader Indian e-commerce market faces stagnation. Photo: Hemant Mishra/Mint
Flipkart is seeking to double its current user base at a time when the broader Indian e-commerce market faces stagnation. Photo: Hemant Mishra/Mint

Bengaluru: E-commerce marketplace Flipkart, which touched the 100-million registered user mark last month, is considering options including opening brick-and-mortar stores in small cities as part of a so-called online-to-offline (o2o) strategy to attract more shoppers.

The initiative, known internally as assisted commerce, is one of several the company is working on, said an executive who requested anonymity. Flipkart is seeking to double its current user base at a time when the broader Indian e-commerce market faces stagnation.

The new strategy will target remote parts of the country where awareness about e-commerce is low and users have inconsistent and limited access to the Internet.

Flipkart’s engineering chief Ravi Garikipati confirmed that the company is working on the assisted commerce initiative, adding that the plan is still at a very early stage. The o2o strategy could take a different shape in the coming months, he added.

“Basically we want to have some sort of a connect with the offline world as well—this is one of our upcoming initiatives, but it’s not something that’s out there yet. As we are looking ahead and trying to grow the market and win over the next 3-5 years, there are a few things we need to do,” Garikipati said in an interview.

E-commerce companies in India have largely struggled to expand the market this year, and investors who were betting that India would create the world’s next Alibaba have had to temper expectations amid valuation markdowns and a slowdown in funding.

Online retail sales fell to an annualized $12 billion in June compared with $15 billion in December, according to estimates by research and advisory firm RedSeer Management Consulting.

“If you look at it, e-commerce in the last year or so hasn’t grown significantly and we are the ones who pioneered and grew the market (in India). And others have come in, cloned what we did and taken some market share. Fortunately we hung on to it and I feel we should have grown and taken more market share from (others) and that is something that we will focus on for the future,” said Garikipati.

“A lot of folks are still comfortable going to the offline world and doing their (shopping). We’ve also seen in some pockets that while people spend some time on their commerce apps, they still feel comfortable going offline and getting the touch-and-feel experience and talking to local vendors. So, we are working on this whole concept called assisted commerce—it’s just a concept at this point,” he added.

The company recently forged an alliance with e-commerce start-up StoreKing as part of its o2o strategy.

Flipkart, however, is not the only e-commerce company betting on o2o.

Amazon India launched its offline shopping initiative called Udaan in late 2014. Under this initiative, the company selects and trains local entrepreneurs to showcase its products in smaller cities and towns as well as in pockets of metros where Internet connectivity is poor.

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Amazon India has also signed a partnership with StoreKing, which has a presence in more than 10,000 rural outlets across south India. StoreKing offers tens of thousands of products via its tablets installed at retail outlets and so-called corner or kirana stores in rural areas. It offers product information and shopping services in regional languages, a key attraction for rural shoppers.

“What it means is that we have folks who essentially spend some time on our website and then when they reach any store, we (want to) have the technology that can tag them as somebody who I know is interested in a particular product and spent so much time on the Web trying to understand what it is. So, it’s online-to-offline there,” said Garikipati

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