Koteshwar LN, business head, Flipkart Wholesale, told FE that the company is evaluating several models for expansions, which currently has 28 stores, and fulfilment centres along with a significant presence online.
“We intend to continue with these 28 stores, but in terms of the overall expansion we are looking at multiple models and one of key models that we are looking at is having fulfilment centres all across and not stores out there. We are evaluating a hub and spoke model too,” he said.
He added that the company will keep its focus on topline and bottomline growth together, and is looking at a “sustainable omni-channel approach”. He explained that as online wholesale business is at present, the players are focussed on only topline, while losing money and eroding bottomlines. “Our approach will be different since we are not going to focus only on topline and leave the bottomline. Our ambition is to be a market leader who does not lose money and yet is able to grow the topline.”
Koteshwar said that technology has enabled this possibility as the company is able to manage its product mix dynamically to keep on its sustainable business model. For instance, in the current volatile commodity price scenario, the company consciously reduced the contribution of staples to its product mix by 2-5 percentage points, which otherwise contributes to 40-50% of the product mix for a typical wholesaler.
He explained that as a wholesaler the company cannot hold on to stocks, and due to volatility with the oil prices and inflation etc, by the time the stock was going to the retailers, the prices came down.
“This meant we are starting to bleed, which is not aligning with our sustainable business model. So, in the near term our contribution of foods and non-foods has increased a bit. However, once it stabilises, I think we will be in a position where staples will come back to those percentage as any other players,” he said.
The other step that Flipkart Wholesale has adopted is to balance the mix and have more regional and challenger brands— which are strong in a certain geography of a country, but not in any other geography. “Because of our ability to understand the retailer and know what products can move in which part of the country, this strategy is working out well for us,” he said.
Koteshwar said that while the company never restricts certain kind of supply, it is tweaking its mix through insights from retailers, which is helping it protect its margins too. “There are certain changes in the behaviour of the members due to inflation which in turn is coming from the consumer. One thing we can definitely see is that small sized packs, where the cost is lesser, are moving fast, the companies are able to supply it, and the retailers are taking it. Larger packs of regional and local brands which are more value for the customer are also moving,” he said.
However, he added that from the company perspective there is no major shift in category, and such shifts are typically momentary in nature, and never long term, until and unless the wholesaler decides not to sell anything, which he said the company never does.