flipkart: Grocery store, hyperlocal and Shopsy will be priority, according to Flipkart CEO
This, as Indian e-commerce has seen the entry of young players, a deluge of investor capital and, for the first time in many years, challenged incumbents like Flipkart and Amazon.
Krishnamurthy said the Bengaluru-based company, majority owned by US retail giant Walmart Inc., would double those bets while pushing healthcare and travel where it made strategic investments last year, instead of diversifying more this year.
The last two years have been mostly spent launching new products, but in 2022, “we’re going to scale all of these companies,” he said. âShopping, groceries, travel and healthcare are big and we’ve made massive investmentsâ¦ We really want to take them to the next level of growth and attract customer adoption over the next 12-18 monthsâ¦â
In July of last year, Flipkart raised $ 3.6 billion at a valuation of $ 37.6 billion, in what was its first funding round since being acquired by Walmart in 2018. In addition to its own fundraising fund, the retailer has had a busy year making multiple investments and acquisitions. . The company is estimated to have spent around $ 400-500 million on mergers and acquisitions over the past 12-18 months by buying out travel booking site Cleartrip, online pharmacy SastaSundar and recently invested with Walmart $ 145 million. dollars in Ninjacart, a fresh food supply chain startup.
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Regarding his IPO plan, which ET says is slated for this year, Krishnamurthy said: âWe have not had any discussion with the board of directors of the company on the IPO until ‘now and are not ready to share a specific timeline. ”
âBut e-commerce in India has yet to take place. The penetration of categories like groceries, which accounts for 70% of commerce in India, is probably 1%; it must go up to 5-10%. The value segment needs to open up and we’ve entered new categories like travel and healthâ¦ The way we think about that is we need to continue to drive adoption and these businesses and a natural result of that. would be an IPO.
Competition in e-commerce
But competition is raging in some of these spaces. Flipkart’s Shopsy, which launched in July last year, has backed Meesho, backed by SoftBank, alongside players such as DealShare, backed by Tiger Global, and Singapore-based Shopee, which has entered India. In the super-fast delivery segment, Flipkart Quick faces companies like Swiggy’s Instamart, Blinkit (formerly Grofers) and Mumbai newcomer Zepto.
Krishnamurthy said that the competitive landscape of the e-commerce industry has not changed much in recent years despite the arrival of young companies.
âWe don’t think the new players are playing with the level of capability and depth required for e-commerce in India. No matter how much capital you bring, this is not how you can earn e-commerce in India, âhe said. He added that these companies were hacking growth instead of developing deep supply chain integration capabilities and end-to-end commerce technology.
Although Krishnamurthy did not name any specific company, Meesho, which raised $ 570 million in November and is valued at $ 4.9 billion, has emerged as a key player in the social commerce space where selling is made easy. through platforms like Facebook and WhatsApp. The company has recently moved away from group buying and going directly to consumers like Flipkart and Amazon do.
Krishnamurthy said that there is no such thing as “social commerce”.
âI don’t know what that means. Trading means the right selection, the right value, and the right service. The social is a way to make this value proposition more discoverable in a relevant way, by amplifying it. Shopsy is itâ¦ â
He also claimed that Shopsy had become a leader in the value e-commerce segment in a short period of time and continued to grow over 20-30% month over month.
Commenting on the 10-15 minute delivery proposition offered by various companies and the venture capital rush into space, he said, âI don’t think this is the right customer model for the long term. We would consider a more sustainable company that delivers it in 30-45 minutes with good value for money and good selection. This is how we see local commerce rather than forcibly responding to a consumer need that does not actually exist in the market.
Lightning-fast commerce has attracted millions of dollars not only in India but also around the world, with startups like GoPuff, Gorillas, and Getir getting jaw-dropping valuations over the past year. Krishnamurthy added that even in developed markets including the United States and Western Europe, customer sophistication has not reached the point of demanding products in 15 minutes.
So why is this mass of capital being dumped? âI think there is probably an opinion that new customer habits can be created and ditches can be built. But to build something like this, major investments will be needed. ”
Another problem with the 15-minute delivery model is that one has to choose between fast delivery or a wide choice and great value for money, he said.
Flipkart Quick, which launched as a 90-minute delivery service, has a presence in 14 cities and the company plans to expand it to more than 200 cities by 2022. Likewise, Flipkart will also look to grow its business. of fresh fruits and vegetables as part of the larger grocery store category currently operating in Bengaluru and Hyderabad.
âWe announced the investment in Ninjacart, it is a deep strategic partnership. We also have partnerships with several farmer organizations and will be launching Fresh in more cities over the next 6 to 12 months, âhe said.
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Krishnamurthy said that Myntra, the group’s online fashion retail platform, has only scratched the surface in the online branded fashion space. Myntra will continue to operate independently under the new management with its own strategy, targeting its customer segments. “We are going to invest heavily in it and develop it disproportionately, the new team is very enthusiastic,” he said.
At the end of last year, Flipkart announced changes in the management of Myntra, with its former CEO, Amar Nagaram, leaving the company to start her own business for which she is raising venture capital. Former Flipkarte executive, Nandita Sinha has been appointed new CEO, effective January 1, 2022.
According to Krishnamurthy, Myntra has continued to grow over the past 12-18 months except when the segment has been hit hard by the Covid-19 pandemic. In the branded fashion category, we would have gained market share rather than losing it, he said.
The online fashion industry has witnessed the rise of Ajio from Reliance Industries over the past two years, calling into question Myntra’s leadership in the segment. Flipkart runs its own fashion business, but targets a different set of consumers, while Amazon India’s fashion business has yet to achieve significant success in the category. âWe believe that competition is necessary and that it is in fact healthy. The burden of expanding the market is not just on one player, âKrishnamurthy said of the increased competition in online fashion.