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Bengaluru: Online marketplace Flipkart has launched its first private label business under an umbrella brand called Flipkart Smart Buy, as part of a push to improve margins.

Flipkart will launch a second private label brand early next year and mostly target categories such as electronics, accessories, home decor and furniture with the two brands, a top company executive said.

Flipkart Smart Buy will span 25-30 categories in electronics, electronic accessories and home plastics for starters, said Adarsh Menon, Flipkart’s newly appointed head of private labels. The private label goes live Friday, he said.

Flipkart’s private label launch comes at a time when the company is grappling with the impact of demonetization, which has hurt sales; is in the middle of an effort to raise a fresh round of funds; has witnessed top-level departures; and has also faced multiple valuation markdowns from existing mutual fund investors such as Morgan Stanley.

“Over the next 2-3 months, we will launch our second (private label) brand, which will play in a different set of categories in home decor, home furnishings, home appliances, and furniture," Menon said. “That should take us through to April —two umbrella brands and maybe 40 product categories."

Last week, Flipkart’s former head of private labels Mausam Bhatt, along with senior vice-president of engineering Peeyush Ranjan, resigned from the company— the latest to join a wave of high-profile executives who have quit in the past year. Following Bhatt’s departure, Menon was named the head of Flipkart’s private label business.

Flipkart’s strategy is to address “quality gaps across categories" including in some where there are already several brands, Menon explained. The idea is to build scale, putting “high-quality products at affordable prices in the hands of our customers".

The private label push from Flipkart comes months after it was initially scheduled.

After returning to Flipkart to engineer a turnaround in its fortunes, current business head and former Tiger Global Management executive Kalyan Krishnamurthy deferred the e-commerce firm’s renewed attempt to build and launch a private label business in August and focused all the company’s energy and resources into delivering a blockbuster Big Billion Day sale, Mint reported first on 9 August.

In May, chief executive officer Binny Bansal had proposed building a large private label business, given the fat margins these products offer.

In October, after the successful conclusion of the festive season sale, Flipkart resumed its efforts to launch the private label business, said a company executive on condition of anonymity.

Flipkart’s entry into private labels comes at a time when arch-rival Amazon is also making strides with private labels. Amazon’s private label efforts have so far mostly been concentrated in the fashion category—a category where Flipkart will also soon make a play with private labels, Menon said.

Flipkart’s independent fashion marketplaces Jabong and Myntra already have several private labels.

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