The logo of India's largest online marketplace Flipkart is seen on a building in Bengaluru (Photo: Reuters)
India’s largest e-commerce marketplace, Flipkart, is looking to boost payouts of its private label sellers in order to build stickiness and ensure delivery of high quality service to its customers.
It will pay sellers 5-10 per cent higher margins on its private label products compared to the average margins they earn in the respective categories.
“We want sellers of our private label brands to make anywhere between 500-1,000 basis points more profit selling these products. There is just a more competitive value chain that we get from sellers of these brands,” said Adarsh Menon, head of private labels at Flipkart.
Along with the goal of driving 10 per cent of its revenues through private labels by December, Flipkart said it would look to reach its seller payout goals in the same time.
The company said earnings from private labels were much higher and was is looking to pass on the same to its trusted sellers.
Over the past week, the company has launched several new products in the home appliances space, such as mixers, grinders and cooktops, under its SmartBuy brand. It said the move was the phase-II of private label launches, moving a step beyond low-cost items such as charging cables and smartphone cases.
“We have already entered phase-II of Flipkart Smartbuy. In phase-I, which happened over the past three months, we had a lot of low-end products like chargers, cables, power banks and the response has been excellent,” added Menon. By the end of July, Flipkart will move into the business of selling furniture as well as staples, and by August-end it will look to get into the large consumer appliances space.
The company is in a race to get as many meaningful product categories as possible before its Big Billion Day sale that comes around the festive season of Diwali.
In furniture, the company is looking to match the prices of unbranded products while giving consumers the assurance of a brand. Flipkart said it is sticking to its mantra of plugging gaps in its marketplace with private labels, which would carves out a niche for itself and doesn’t cannibalise sales of its partner brands.
For consumer electronics, Menon said there’s no point entering a market like that of smartphones or laptops which are already well served. Instead, Flipkart is looking at bringing out its own line of televisions and air conditioners plugging quality and price gaps it sees in today’s market.