Home / Companies / News /  Flipkart targets 2% of country’s two-wheeler sales by December

Bengaluru: Flipkart Ltd, India’s biggest online retailer, will step up efforts to boost automobile sales, especially of two-wheelers, this year, hoping the high-priced products will boost its overall gross merchandise value (GMV).

GMV is the value of goods sold online, excluding discounts and products returned by customers.

Flipkart aims to account for about 2% of India’s two-wheeler sales by December. It will also launch spare parts and automobile services in March, said a senior company executive.

“We have piloted both four-wheelers and two-wheelers. We have been there with four wheelers and going live with two-wheelers," said Adarsh Menon, vice-president, electronics and automobiles, at Flipkart.

“The size of the market is large for both. But, to begin with, two-wheelers is the logical first step because the customer base for that segment is much more," he said. “Ultimately, we will sell four-wheelers and we will sell them this year itself."

Flipkart started testing the market with the launch of car accessories, a segment which the company claims grew 600% since its launch in April last year.

Flipkart tied up with Bajaj Auto Ltd in December to sell two-wheelers and Mahindra and Mahindra Ltd in January to sell its newly launched compact sport utility vehicle KUV1OO.

The latest to join the bandwagon is TVS Motor Co. Ltd for the sale of two-wheelers, which it started offering on Flipkart in Bengaluru starting Wednesday.

According to February report by the Society of Indian Automobile Manufacturers (Siam), 13.62 million scooters and motorcycles were sold in India between April 2015 and January 2016.

Since last year, Flipkart has increasingly focused on selling furniture, refrigerators, televisions and other large appliances—high-priced products that help boost sales growth, which is crucial to its valuation.

Flipkart’s smaller rival Snapdeal has already tested the automobile market with limited success. Snapdeal tied up with Mah-indra and Mahindra to sell the Scorpio SUV in September 2014.

In November, it launched an automotive platform, Snapdeal Motors, selling everything from car accessories and spare parts to riding gear.

According to industry experts, sales of automobiles on Flipkart will essentially entail snatching market share from the offline segment, instead of expanding the existing market through online channels, as was the case with fashion and electronics.

Selling automobiles online would mean Flipkart wouldn’t have to deliver the products; that would be taken care of by dealers. But it may find it difficult to push online sales of two-wheelers without discounts, they said.

“It can significantly add to Flipkart’s bottom line as this is something where they are not doing the fulfilment. The fulfilment is happening by the dealer. However, achieving the 2% (of sales) mark may be difficult as rural play has a very important role to do with the sale of two-wheelers. Besides, unless they do deep discounting, there is no incentive for booking through Flipkart," said Munish Aggarwal, director at Equirus Capital Pvt. Ltd, an investment bank.

At present, the online sales of vehicles largely revolves around used vehicles with a number of start-ups, such as CarTrade, CarDekho, CredR and Droom vying for the top spot. While Warburg Pincus and Temasek Holdings-backed CarTrade, with $175 million in total funding, and Google Capital-backed CarDekho compete in the four-wheeler segment, CredR and Droom are in the two-wheeler space.

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