Flipkart guns for 15% sales from private labels in next one year

Eleven months after its foray into private labels starting with SmartBuy last December, Flipkart is gunning for a contribution of 15 per cent sales from its private label brands in the next 12 months.

Currently, private labels at Flipkart contribute about 10 per cent sales to the categories they are placed in.

A top executive from Flipkart told BusinessLine , the private label team is ideally looking to garner a 20-22 per cent sales contribution from private label brands in the next five years, much like some of the most successful retailers around the world.

To create a private label, Flipkart scrutinises and analyses customer data on its platform for two important parameters: gaps in selection across categories and gaps in quality of the selection.

“When we first decided to foray into private labels in mid-2016, a ‘Tiger Team,’ for private labels was created internally to research 50-odd retailers around the world, including Europe, the US, China and India, to envisage what the private label landscape would look like for Flipkart over the next few years. Research revealed that private labels can contribute 10-20 per cent of the company’s business. For instance, US-based Costco Wholesale’s private label brand Kirkland contributes 20-25 per cent of its business,” said Adarsh Menon, Head of Private Labels at Flipkart.

Research and analysis While Kirkland is one brand that plays across every product from shoes, milk to frozen pizzas and shampoos, Flipkart decided to look at positions in a customers’ mind and create multiple brands that cater to those positions.

The team also realised that private labels in electronics can take longer to scale as it operates in a category with big global brands.

However, generic unbranded categories presented itself as a huge opportunity, where hit rates could be very high and scale much easier to achieve. “We launched Flipkart SmartBuy with two generic categories — cables and chargers, which has now been ramped up to 50 categories including mobile and IT accessories, home products and small appliances, personal healthcare devices and a range of audio devices. We will add 30-more categories to have 80 categories in the next 3-6 months,” said Menon, who added that the Flipkart SmartBuy customer proposition — everyday use, low-ticket size products was a runaway success, as it came with the quality and trust of the Flipkart brand.

The SmartBuy success led to the launch of two fashion private labels earlier this year — Divastri for sarees and dress materials and Metronaut for casual men’s wear, followed by Anmi, a contemporary ethnic wear brand. Billion, a Made-for-India private label brand that aims to bring high quality products that are designed for the unique needs of Indian customers, was launched in July. Two more private label brands — Perfect Homes and MarQ — for furniture and large appliances were launched in September and October respectively. Flipkart is also in the process of launching private labels in groceries, a category which it is piloting since the last three weeks with select customers in Bengaluru, before rolling it out nationally.

More categories planned “We have 65 categories across our three private label brands, Flipkart SmartBuy, Perfect Homes by Flipkart and MarQ by Flipkart, and have an entry plan of 25-30 more categories in the next 3-6 months. Many more categories will be launched in furniture where we are present in only nine and in MarQ which already has TVs and microwaves, to which categories like air-conditioners will be introduced,” said Menon.