BENGALURU | MUMBAI: Walmart-owned Flipkart will continue to focus on pure-play ecommerce instead of ecosystem building with bundled services despite rising competition from new entrants like Reliance Jio and existing rival Amazon, a top executive told ET.
Flipkart Group chief executive Kalyan Krishnamurthy said the Bengaluru-based company will deploy most of its investments and resources into winning commerce with a focus on value consumers and the lower end of the market, a fast-growing segment in the Indian online retail industry. The etailer’s stand to not immediately double down on categories such as grocery and video comes amid reports of Google and Amazon eyeing deals with telecom firms to take on Reliance Jio-Facebook juggernaut.
“We will primarily be a commerce player … commerce is one place where we want to disproportionately invest. While we have video, gaming and several such propositions, all of those are through partnerships. The DNA of the company is partnerships and this is how we will be going forward,” Krishnamurthy said.
Krishnamurthy said around 50-60% of new users who come into the consumer Internet funnel every year in India make their first transaction through a video platform. “While we wanted to have video for the customer, we did not want to build this ourselves and therefore we struck partnerships,” he added.
The company’s investments will go into scaling its value proposition of affordable ecommerce and push its 2GUD platform which offers new and refurbished products across categories, looking to disrupt the classified players. “The country is becoming more value-conscious. Earlier the concept of value was associated primarily with the middle-income segment but now it is expanding to the upper-middle-income groups who are adopting value-led selections,” he said. Ecommerce companies have seen volume demand recover by as much as 70-80% in the first two weeks after they resumed sales of non-essential items. While most of the demand is pent-up orders, say industry executives and analysts tracking the segment, new users are coming online to buy products beyond grocery and consumables, Krishnamurthy said.
“The way consumers thought about essentials has changed in a very big way and the product mix has moved towards home and kitchen appliances, select electronics and loungewear,” he said.
Other than videos, grocery is another category Flipkart has opted to not aggressively chase if it is not sustainable. The etailer’s grocery service is present across five cities currently under the Supermart brand. “We are not in that opportunistic game of doubling down on anything. As for grocery, if we believe there is a strong value proposition, we will continue expanding our footprint but in a very sustainable way. We will not change our long-term growth strategy or category mix focus after the Covid-19 outbreak,” he said.
“Technology and innovation can bring in huge benefits to the Indian agricultural industry. There is a huge push from the government and therefore we wanted to participate in this. Some technical queries have come in response to our application, we will review them and go back to authorities with whatever questions they have asked,” he said.
On the question of how kiranas and trader lobbies have been pitted against big ecommerce players, Krishnamurthy said the grocery retail part of their business was extremely small and it was unfortunate that such a narrative was being drawn up.
“The country has roughly 60-65 million SMEs, and 20-23 million of these are in trade sector. Out of that, around 10 million plus is what we call as kirana ecosystem, comprising mostly dry grocery and fruits and vegetables. Grocery on Flipkart’s marketplace is less than 0.1% of that number, calling that as competition or displacing any SME is completely unfounded,” he said. Krishnamurthy added that the rest of 10 million trader SMEs were retailers of home products, fashion, lifestyle, footwear and a lot of them sell on the Flipkart ecosystem.
This Our focus remains on pure-play ecommerce: Flipkart's Kalyan Krishnamurthy was originally published on https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/our-focus-remains-on-pure-play-ecommerce-flipkarts-kalyan-krishnamurthy/articleshow/76252974.cms