We all know that Flipkart is widely acclaimed as the ecommerce leader in India. We also know that with the huge discounts ecommerce marketplaces such as Flipkart offer, they are a long way away from achieving profitability.
So when we came across this article by VCCircle estimating Flipkart’s sales revenue in the last financial year to be anywhere between 14,000 and 17,000 crore, which would put it just behind Reliance Retail who is the top offline retailer, with sales of Rs 17,640 crore, during the same period, it was worth taking a closer look.
Flipkart’s organisation
Flipkart’s third-party vendor, WS Retail generated sales of Rs. 10, 163.4 crore in the last financial year, which was a 224% jump in growth. Despite the large sales figures, WS Retail has a net worth of only RS. 5 crore according to the Registrar of Companies records. At the same time, Flipkart Internet witnessed a 268% increase in sales revenue to a Rs. 659.4 crore figure and also boasts of a Rs. 4,1819,4 crore net worth.
Although some important figures are not available yet, It is apparent that WS retail is close to matching the growth of Flipkart Internet. Based on these numbers, along with Gross Merchandise Value figures that have been released and the predicted month on month growth, VCCircle came to its opinion that Flipkart sales revenue is close to 17,000 crore. Flipkart is also currently enjoying a good festive period which will add to the sales.
Where are the sales coming from?
With sales continuing to increase for Flipkart, it is becoming increasingly understood that tier 2 and tier 3 are contributing to this trend. From Independence day to Diwali, Flipkart witnessed an increase of 60% from small cities. Also during the Big Billion Day Sale 50 to 60% of traffic came from tier 2 and tier 3 cities.
“With India opening up to online shopping, more and more customers across geographies are shopping with us. In fact, with increased adoption of smartphones and internet penetration, close to 50% of our traffic comes from smaller cities. Participation from places like Jaipur, Aurangabad, Guwahati, Indore, Nagpur, Coimbatore, etc, is on a constant rise,” said Ankit Nagori, chief business officer, Flipkart.
Initiatives for online buyers and sellers
Flipkart aims to further penetrate the markets in small cities where ecommerce has not reached yet. Its Flipkart Connect campaign was created to teach and spread knowledge about the joys of shopping online. The ecommerce marketplace took further steps to growing its brand by tying up with Spice Hotspot for an offline presence, to sell its popular mobile phones.
Flipkart also rewards and recognises its top online sellers from small cities through a programme called FlipStars. After all nearly 40% of its 60,000 sellers are from small towns.
Retaining talent
Meanwhile, Flipkart feels that a large part of its success has come from its employees and it has now decided to reward them, before they are tempted away to join new entrants into the ecommerce space. Flipkart has sold a very small stake, valued at around Rs. 180-240 crore in its employee trust fund in order to motivate and retain talent by offering stock options.
“At Flipkart, we believe the reason for our remarkable growth has been our people who have demonstrated immense ownership and have consistently gone way beyond the call of duty. The employee trust is a structure to facilitate employee liquidity across all levels depending on the amount of vested options. This is a repeatable structure and we do intend to use it as we go along at least on an annual basis,” stated a Flipkart spokesperson.
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