Amazon, Flipkart ramp up credit products for festive sales

Bengaluru: E-commerce firms Flipkart and Amazon are offering a slew of fintech and credit products to make buying more affordable, even in Tier 2 cities, in the upcoming festive sales as they look to widen the customer base.

These include partnerships with banks for broader coverage of debit card EMIs, alliances with digital non-banking financial companies (NBFCs) for no-cost EMI solutions and boosting buy now, pay later offerings.

Walmart-owned Flipkart, which has partnered with more than 20 banks and financial institutions, will be targeting nearly 70 million customers this festive season with its debit card and pre-approved EMI products, as well as its Flipkart Pay Later offering.

Amazon India is targeting to reach over 50 million customers through its credit offerings.

In partnership with Samsung, Flipkart has introduced a ‘Smart Upgrade’ plan, where users can buy a Samsung Galaxy smartphone by paying 70% through EMIs and the balance 30% is a buy-back discount for the next smartphone upgrade. After a year, customers can upgrade to a new phone on Flipkart and return the initial phone purchased. (In case a customer wishes to retain the initial device they can pay the 30% after 12 months.)

Flipkart has also partnered with institutions like Federal Bank which have more Tier 2 customers and partnered with Paytm wallet to expand payment options for this segment of users.

“We have expanded our partnerships this festive season, and have launched simpler way to avail credit for first-time and Tier 2 shoppers. Through our partnership with Bajaj Finserv, customers can try availing credit through their phone numbers instead of putting their debit card number, which is a complicated process for first-time digital users,” said Smrithi Ravichandran, business head - payments, consumer & commercial lending and insuretech, Flipkart in an interview.

For its pre-approved EMI product protfolio, which includes ‘Pay Later’ and debit card EMI offering, Flipkart has asked financial partners to increase their eligibility base of customers, who can avail credit on the e-commerce platform.

Flipkart will expand this option to almost 20 million customers during the Big Billion Days Sale. ‘Pay Later’ can be availed even on Myntra, whose festive sale starts 16 October.

Flipkart’s rival Amazon has also been ramping up its affordability and EMI offerings, and has partnered with more than 25 banks and financial institutions to provide no-cost credit to Tier 2 customers.

Amazon India said that during the first three days of its 2019 Diwali sale, 75% of credit-seekers on its platform were from Tier 2 cities. It expects a similar ratio of customers availing credit for shopping this festive season as well.

“We have definitely ramped up the coverage of our EMI-based credit products to help customers with affordability, keeping their monthly budget in control. Debit-card EMI will be a critical product for Tier 2 and 3 buyers this festive season. We have also increased the down payment cycles from 6 months to 9 months for credit card holders,” said Vikas Bansal, director - Amazon Pay.

Bansal added that no-cost EMIs now account for two-thirds of all EMI purchases on Amazon.

Amazon launched the ‘Pay Later’ product in April and has already offered more than 10 lakh loans since then.

Both Amazon India and Flipkart have extended their insurance offerings to even electronic appliances, this festive season, including geysers and televisions, which was restricted to just smartphones, during previous festive season sales.

“To encourage sales this festive season and making products more affordable for consumers, merchants are partnering with banks to come up with varied co-branded cards. For instance, Mastercard has a co-branded card with Flipkart and Axis Bank that offers higher reward points, cash backs and other benefits on making card purchases at partner brands,”, said Rajeev Kumar K. senior vice president, market development, South Asia, Mastercard.