1. E-commerce major Flipkart set to log 40% sales growth in FY17, 60% in FY18

E-commerce major Flipkart set to log 40% sales growth in FY17, 60% in FY18

Expects a much larger growth of up to 60% in FY18

By: | Bengaluru | Published: March 17, 2017 5:20 AM
Flipkart is locked in an intense battle for supremacy with Amazon in the Indian e-commerce market. (Reuters)

India’s largest e-commerce firm Flipkart is set to close the current financial year with a sales growth of close to 40% over the last fiscal. The growth would have been much higher but for demonetisation that partially affected the sales in November and December, a top company official said. “Our growth during the first half of the year was very limited in line with the industry trend. In the second half, particularly after Diwali, our growth took off in a big way barring November and December. We have done much better January onwards and we will end the current fiscal with a close to 40% growth over the previous year,” Nitin Seth, chief operating officer, Flipkart, told FE.

He added that the company’s cash on delivery sales got affected immediately after demonetisation. Otherwise, the sales growth in remaining part of the year was robust compared to the previous year. For the year ended March 2016, Flipkart Internet (the marketplace business) had reported a revenue of R1,952 crore and a net loss of R2,306 crore. Flipkart India (cash & carry and wholesale arm) had posted a revenue of R13,177 crore and a net loss of R544 crore.

Flipkart is locked in an intense battle for supremacy with Amazon in the Indian e-commerce market. Flipkart sold 15.5 million products during its five-day mega sale, Big Billion Days, last year compared to 15 million units sold by its rival Amazon. However, the company expects to witness a much larger growth in 2017-18 as it is seeing a good traction in sales across several categories. It expects to clock sales growth of up to 60% in FY18. “We are confident of a higher growth rate next year. Some of the measures we took over the last 6-8 months like expansion in Tier-2 and Tier-3 cities and setting up of additional delivery hubs. We will be adding new category like grocery to our business which will help us grow much higher than that in FY16 and FY17,” Seth said.

Besides smartphones, where Flipkart already has over 50% of its sales, it is looking to aggressively push sales from other categories like large appliances, furniture and food & grocery during the next year.

Flipkart has a customer base of 100 million, while India’s overall internet user base stands at over 400 million. Further penetration into secondary cities will help the company achieve higher growth rates, he said. In 2016, around 65% of Flipkart’s new customers came from the Tier-2 and Tier-3 cities, he added.

Over the last six months, Flipkart added 50 additional delivery hubs and added 1,000 new PIN codes across the country, largely in Tier-2 and Tier-3 cities. During the next fiscal, it intends to add another 1,000 PIN codes to its network and set up 60 additional delivery hubs, mainly in secondary cities. It is also expanding the delivery capabilities of its logistics subsidiary Ekart.

Currently, Ekart has a network of over 400 delivery hubs. Over the last 8 months, Ekart has increased its delivery capabilities and currently delivers 85% of Flipkart’s daily shipments. Just a year ago, it was catering to 75% of Flipkart’s deliveries. “We have expanded Ekart’s delivery capabilities in the last few months and in fact, reduced the dependence on 3PL logistics players. Going forward, we will continue to make use of the third-party logistics providers for some of our operations,” Seth said.

Ekart, he said, will continue to cater to the orders from other e-commerce companies, besides Flipkart, in the next year.

The share of WS Retail, which is the largest vendor on Flipkart marketplace, in the overall sales of the company will be maintained as per the government regulations, he said. The DIPP regulations issued last year had capped individual vendor’s sales at 25% of the total sales.

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