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Did being a marketplace help Flipkart? – Naman Sarawagi, FindYogi

by Naman Sarawai, FindYogi

With the new government in power, the debate around FDI in e-commerce is heating up. Home grown e-commerce leader Flipkart switched from being an e-retailer to an online marketplace in 2012-13. The switch initially looked forced to overcome regulation issues, although it now seems that marketplace is the way to go for e-commerce in India.

Flipkart’s trading unit, “WS Retail”, was offloaded to a separate investor in what seemed like an effort of financial engineering. The company continues to offer products through WS Retail and all its exclusive tie-ups like the Motorola one are also through this unit. Even Flipkart’s private labels DigiFlip, (for electronics accessories) and Flippd (for fashion apparels) are run under WS Retail.

In this report, we look at WS Retail’s current contribution to Flipkart’s electronics catalogue to understand if converting to a marketplace helped Flipkart beyond adhering to govt. regulations. For this analysis we have considered four categories – Mobiles, Laptops, Tablets and Cameras and the data was sourced from FindYogi in the first week of June 2014.

Flipkart’s Catalogue for 4 categories

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  • Flipkart has 2,471 offers for 1,743 product SKUs (stock keeping units) available in-stock. For the sake of simplicity, different colors of the same product are considered as different offers but single SKU.
  • Flipkart is best price seller for 522 product SKUs under these four categories as compared to other popular e-commerce players.

WS Retail’s Contribution To Flipkart’s Catalogue

  • Only about 36% offers on Flipkart have WS Retail as one of the sellers. Remaining 64% offers have only other merchants.
  • These offers constitute 35% of the total product SKUs where WS Retail is one of the sellers.

WS Retail

Best Prices on Flipkart – WS Retail vs Other Merchants

  • Flipkart is best seller for 522 SKUs and WS Retail contributes to about 19% of those cases. Remaining 81% cases when Flipkart is the best price seller is because of other marketplace merchants.

Flipkart lowest price

The data clearly suggests a win for Flipkart with the marketplace model. Though, what this doesn’t say is what percentage of sales is coming from other merchants.

Given the fine balance of quality service and large catalogue size that Flipkart has been able to maintain, would it gain anything if FDI is allowed? Or will FDI do more harm to Flipkart and other homegrown players who already have found a work around?

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