Flipkart may relaunch loyalty programme to take on Amazon Prime
Bengaluru: India’s largest online retail firm Flipkart Ltd plans to relaunch a loyalty programme to compete with Amazon Prime that has become a key differentiator for the American internet giant, three people familiar with the matter said.
A few years ago, Flipkart had launched a loyalty programme called Flipkart First, but the company lost focus in making it work. Customers didn’t take to it and the service fizzled out.
As part of the new loyalty programme, Flipkart plans to offer customers access to a wide range of consumer internet services and has held talks with several internet start-ups including MakeMyTrip, BookMyShow and Ola for potential partnerships, the three people said on condition of anonymity. Flipkart will also offer benefits such as faster and free deliveries and discounts and deals to subscribers, the people said.
Flipkart, which has so far raised nearly $3 billion in two separate tranches this year, also plans to leverage its payments arm, PhonePe, for this new programme.
“What Flipkart wants to ensure is that they don’t miss out in an area where there is potential to grow a huge base of loyal customers—and now is a good time to cash in, given the recent funding and also a successful festive season battle against Amazon,” one of the three people cited above said.
Mint could not immediately verify the time frame for the launch of the revamped loyalty programme.
When Amazon launched its Amazon Prime loyalty programme in July 2016, Flipkart executives privately believed that a loyalty programme was unlikely to be a major win in India. Flipkart believed that people were disinclined to pay for delivery and convenience or content. The people cited above said Flipkart still won’t produce original content like Amazon but the company’s plans to launch a revamped loyalty service marks a strategic shift.
That’s because Amazon Prime has proven to be hugely popular, at least with the well-off in India, who continue to account for the largest chunk of spending on e-commerce platforms. Mint reported in April that Amazon Prime loyalty programme has become an important lever for the company in its battle against Flipkart, accounting for nearly 30% of all orders on Amazon India. Prime helps Amazon snare some of the richest in urban India who are shopping online. Partly because of Amazon’s increasing dominance in urban areas, Flipkart is in talks to buy a large minority stake in ticketing platform BookMyShow, Mint reported on Monday.
Last year, Amazon India launched its Prime membership service in more than 100 cities, offering one-day and two-day delivery on hundreds of products and exclusive discounts for an initial price of Rs499 a year. Amazon expanded the service by adding video content in December through Amazon Prime Video, pitting it against the likes of Netflix and Hotstar.
Flipkart did not respond to an email seeking comment.
While Flipkart plans to push its new loyalty programme, CEO Kalyan Krishnamurthy also wants to ensure that Flipkart keeps cash burn under control. Amazon typically ends up losing money on multiple free deliveries to the same set of customers in the initial phase of Prime. Flipkart is working on a solution to ensure that costs don’t go out of control, the people mentioned above said.
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