Flipkart to start selling ebooks to take on rivals

Written by Sohini Mitter | Mumbai | Updated: May 14 2012, 08:57am hrs
Flipkart, Indias largest e-commerce company by sales, which started as an online retailer of books and later diversified into music, movies and electronic goods, will soon start selling ebooks, a move which experts call tactical, to take on rival sites that offer steep discounts.

An ebook is an electronic or digital book readable on computers, laptops, smartphones or specific reading devices known as ereaders.

Books are one of our largest categories and contribute to one-third of our revenues; getting into ebooks is a natural progression for us, Ravi Prakash Vora, vice-president, marketing at Flipkart told FE. We will try to leverage our partnership with various publishers once when we start selling ebooks.

Flipkarts discounts are comparable to that of rivals Infibeam, uRead and dial-a-book, among others, therefore, it has lost its unique appeal. Getting into ebooks is a good tactical move, said an analyst tracking ecommerce trends.

The company, which aims to cross $1 billion in revenues by 2015, has chalked out a growth plan, which will be driven by category expansion and strengthening of its distribution network across cities. In some years, it also plans to get into high margin categories like apparel and lifestyle. The company, however, feels it is too early to look into the future. It may be too early to get into the details of our future plans, said Sachin Bansal, co-founder and chief executive officer of Flipkart. Though digital delivery is definitely a space we are looking at seriously, we are yet to decide the way forward for verticals such as ebooks.

The Bangalore-based company, started by IIT Delhi graduates Sachin Bansal and Binny Bansal in 2007, ships 30,000 products every day and its average ticket price has risen to R2,500 in the past five years from R1,000, primarily driven by sales of consumer electronics goods.

Flipkart, in which private equity funds Accel Partners and Tiger Global Management have collectively invested $150 million, also launched a digital music portal Flyte in February. The portal, now, delivers 8,000 downloads a day.

But ebooks could be a different proposition altogether. Though the segment is growing at 60-70% globally with online retail giant Amazon selling more digital books than paperbacks, Indian readers still prefer the smell of the paper and the sight of the printed word. The dearth of affordable ebook readers and lack of awareness could be other challenges for digital publishers.

According to industry estimates, Amazons ereader Kindle, which was launched in India in October last year at R18,000, has managed to sell only 2,000 units until now.

Consultants, however, say that Flipkart is better placed as an ebook seller. Online booksellers have a higher propensity to sell ebooks because they already have a captive customer base who are interested in books and are transacting online; hence, this is an extension of their portfolio, said Pragya Singh, principal consultant (retail) at Technopak Advisors.

Also, online stores dont have to necessarily enter the hardware market for this purpose. They can work out arrangements with device manufacturers that integrate the online platform on their products, she added.

A 2010 report by market research company Forrester indicates, though US will lead the demand for ebooks with sales over $500 million, the dynamics for higher growth lies in consumer markets like India, China and Brazil. With more than 15,000 publishing houses and a rapidly growing internet base, India has a huge potential for ebooks.

Ebooks will not eliminate the paperback market, but create new avenues and formats for publishers, said Technoparks Singh. They will need to get positioned as content providers across multiple media and multiple platforms.