By Salman SH
The shift to online buying is not just happening in the metros but also the smaller cities and beyond. This has led e-commerce marketplaces like Flipkart to swiftly expand their customer base, onboard thousands of new sellers, set up warehousing spaces and hire in the run-up to the festive season. Amitesh Jha, senior vice president, category and marketplace at Flipkart, spoke to FE’s Salman SH about the company’s plans for the year ahead. Edited excerpts:
Q. With an influx in internet users coming from Tier-2 and smaller towns, how is Flipkart focusing on rewiring categories in its marketplaces to serve this new demand?
A. So, a few changes, which have essentially occurred due to the pandemic is that we have seen an uptick in the consumer traffic into our website who are browsing products even though they don’t eventually end up making a purchase. I can say that there is a general shift in consumer behaviour and affinity towards e-commerce, especially in smaller tier towns.
We have had categories like general merchandise and personal care moving into the list of most active categories in terms of demand in the last two years. However, the existing top categories like electronics and fashion have completely flipped in terms of demand. Also, with the whole behaviour shift, the consumers are now increasingly preferring to buy groceries online in large numbers. Out of the new internet customer trying out e-commerce for the first time – the general merchandise and grocery categories are becoming a priority, and not just smartphones and electronics.
Q. How has the influx of internet users added to your seller base?
A. In the last two years, we have had an inpouring of small and medium-size sellers coming in from smaller tier geographies. Our biggest concern on these emerging seller groups was that once the pandemic takes a back burner, we might see these sellers go back to offline retail again, but that isn’t how it turned out. A few emerging online sellers in the smaller towns, I spoke to, pointed out that Flipkart was a new source of revenue for them, with at least 10-15% of their revenue coming from us exclusively after the pandemic. We have also seen an uptick in the addition of new D2C brands (sellers) in the marketplace. The D2C business model works largely based on consumer behaviour data that they generate from their platform and marketplaces like Flipkart. So, beyond just as a source of distribution, we have become an important part of their business.
Q. The mobile phones category is still one of the largest e-commerce categories and Flipkart has been competing in this fiercely. How would you see this mobile phone category evolving in the next few years?
A. The number of consumers showing interest in purchasing mobile phones online is only expected to rise every year. We have experimented with increasing the supply of affordable smartphones, and devices in the lower-priced segment including feature phones as a category. Most consumers from non-metro cities who buy smartphones online are exposed to e-commerce platforms like ours for the first time. We can then convert them to sticky customers and gravitate them to buying products from multiple categories like general merchandise, fashion, grocery, etc. Also, the refurbished electronics and phones category has become another growth driver for us in terms of building user stickiness. In many instances, we can convert existing feature phone buyers on Flipkart into smartphone owners using our refurbished phones business.
Q. The grocery category has now primarily narrowed down into the 10-minute delivery format and the 24-hour delivery format. According to you, is there a space for both models to co-exist?
A. We believe that the larger grocery delivery category is always going to be a discount-led market and we know for sure that the next ally for business growth will come from the grocery sector. Also, the future demand for this category is expected to originate from smaller cities and towns. However, this is still a price-sensitive market. On the other hand, the grocery category still has a large base of users who are satisfied with getting groceries delivered in 24-48 hours. That market hasn’t worn out yet. But we do believe there is a right mix of both quick commerce and 24-hour grocery delivery demand to be serviced since the use case or user need for each of these formats are different.
On the quick commerce model, users are looking to get a small basket of items that they need immediately, but still, the bulk ordering or large basket sizes are resent in the normal 24-hour delivery format. There is more money to be made in large basket formats than in the smaller basket format.