Flipkart targets Rs 90 bn GMV from sale of large appliances in FY19

Flipkart’s focus on getting customers to make big ticket purchases on its platform seems to be paying off. The e-commerce major has now set a target to drive Rs 90 billion in gross merchandise value (GMV) from sales of large appliances, in FY19. 

This represents a 100 per cent year-on-year growth in this segment. The growth is expected to be driven largely by sales of items such as television, air conditioners and refrigerators. 

In May, Flipkart claimed to have cornered 18 per cent of the overall television market in India, backed by the IPL season. Apart from launching new brands and forging exclusive partnerships, Flipkart says its investments in a separate logistics division for large appliances and after sales support through subsidiary Jeeves are paying dividends. 

Big ticket buys

  • Sales of large appliances accounted for Rs 40-45 bn in FY18 on Flipkart

  • In May, the company had 18% share in TVs, 9% in ACs and 5% in refrigerators

  • Flipkart is doubling its warehousing space by next year, from 2.4 mn sq ft currently

  • It will be able to service 15,000 pin codes by then, compared to 10,000 pin codes served as of today

The firm said it delivers large appliances to 10,000 pin codes and will grow that number to 15,000 by the end of the fiscal. “We are on track to achieve our target of Rs 90 billion and are ahead of some estimates in the first quarter. The following few months will be a little slow, but in the festive season we will expand our market share massively,” said Sandeep Karwa, head of large appliances at Flipkart. 

Karwa, who previously headed the smartphone division, said he was following a similar strategy for growing sales of large appliances. 

This included bringing global players such as Xiaomi into the market.  It is also helping smaller local brands such as VU, BPL and others to revive themselves with products that offer more relevant specifications, and moving conversation among customers beyond large brands such as Samsung, LG and Sony. 

This helps the firm serve customers who want great specifications, but at a cost lower than that of top-tier brands. A big focus area has been televisions, since the category drives 55 per cent of revenues in the large appliances division. 

Today, Flipkart is offering delivery and installation of televisions within 24 hours. 

“In the next 12-18 months, we will grow by bringing brands that are either not in the country or don’t have the capability to get into the market. We will also utilise Ekart’s capability of end to end integration that allows us to picking products right form a brand’s doorstep in China or from a factory in Tripura,” added Karwa. 

He said that by using Ekart, Flipkart was able to eliminate middlemen consisting of national and local distributors, which is helping it pass on cost benefits to customers. 

But to make products more affordable, it would have to rely heavily on investments the company is making in offering easier access to credit. 

“Today, only 20 per cent of large appliances purchases on Flipkart are done through credit. We feel we can grow the market if access to credit is made easier, similar to how 75 per cent of all cars are being purchased making use of loans. People are actually willing to pay interest, but we’re focusing on no-cost EMIs that make it more attractive,” Karwa said. 

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel