Bengaluru: Online marketplace Flipkart is betting big on its product exchange programme and low prices to drive sales of large appliances such as televisions, washing machines and refrigerators in its upcoming flagship Big Billion Day sale, as it seeks to increase its lead in an important product category for e-commerce firms.
The company has set a target of tripling its market share to 20% of all LED TVs sold in India in October.
Flipkart expects its product exchange programme to account for at least 30% of all large appliance sales in October, said Sandeep Karwa, head, large appliances, at the online marketplace.
Apart from its product exchange initiative, Flipkart expects its no-cost EMI (equated monthly instalment) scheme, low prices and wide product range including exclusive partnerships with brands such as BPL Ltd and Vu Technologies Pvt. Ltd to drive an increase in market share in large appliances.
“BBD (Big Billion Day) is going to be about consumer finance, the no-cost EMI that we are running right now, it is going to be about product exchange and about getting deals which are of great value. So, we are going to bring down segments—a segment which was one up is going to be at a lower segment price,” Karwa said in an interview.
This festive season is the most important in recent memory for Indian e-commerce firms. Flipkart, which saw poor sales in the first half of the year, is betting on a blockbuster Big Billion Day sale. If that happens, it may get the platform to keep improving its results and raise a fresh round of funds.
“Today what you largely see is category level competition, and not domination all across. Customers also largely have category specific loyalty towards e-commerce brands, and they are going with players who are leaders in some segments,” said Sreedhar Prasad, partner, management consulting, at KPMG India.
“What matters most in category-led domination are factors like quality and fulfilment. Pricing is not a big issue—players who take care of quality and fulfilment will end up gaining market share,” he added.
Flipkart is driving prices lower partly by getting brands to remove some non-essential features from TVs, which account for more than half of the large appliance business. “What we will do in October (for BBD), there are going to be smart TVs from leading brands at the prices at which the basic TVs were sold. 32-inch TVs will be sold at the price of 24-inch TVs,” Karwa said.
Large appliances is the third-largest product category for Flipkart after smartphones and fashion and accounts for 10-15% of the company’s sales, according to company executives.
Flipkart resumed sales of large appliances in early 2014, nearly a year after customers complained about late and inconsistent deliveries of TVs and washing machines.
Now, Flipkart is the market leader in large appliances by a comfortable margin, according to analysts. And unlike smartphones and fashion, two categories where arch rival Amazon India has caught up with Flipkart, large appliances is a tougher category to crack.
Flipkart has built a well-oiled, independent supply chain for this category, offers attractive financing schemes through tie-ups with banks and has a better product selection currently than rivals.
Flipkart, which currently services large appliance orders from six warehouses, also resolved the after-sale issues—of installation and maintenance—it faced earlier by acquiring Jeeves Consumer Services Pvt. Ltd in late 2014.
For the October sale, while Flipkart is relying heavily on exclusive partnerships with brands such as BPL and LeEco, the company is also working on rolling out lucrative offers for non-exclusive brands.
“If I have to sell 20% of the market, it can’t be dependent on just the exclusive partnerships. We have to see what the consumers want. A consumer who wants to buy X brand will only look for that brand and I need to have a very good offer on that brand,” said Karwa.
Flipkart is also tying up with Samsung separately to bring the brand’s sellers onto Flipkart’s marketplace platform. “There’s something interesting we’re doing with Samsung: they’ve identified 100 exclusive Samsung stores. So, if you go to a mall, you’ll see a Samsung Digital Plaza—this is a seller that has been earmarked exclusively for Flipkart by Samsung,” he added.