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Diwali sales strategy: Flipkart to rebrand appliances category, expand warehouses

LiveMint logoLiveMint 03-08-2017 Anirban Sen

Bengaluru: India’s largest online retailer Flipkart plans to rebrand and revamp its large appliances category, launch a new private label for some of its home appliances and open several new warehouses for high-priced products and appliances, even as it remains on track to more than double sales in the category this year, a top company executive said.

In an interview on Thursday, Flipkart’s head of large appliances Sandeep Karwa said that the online retailer decided to rebrand the category to connect better with customers. Flipkart is also undertaking a revamp of its operations and supply chain in large appliances to improve selection from top-selling brands such as Samsung and VU, while also ensuring faster delivery and product installation times.

“We are rebranding the category as Big Home Appliances, so that we take care of all televisions and appliances considered large. From a supply chain perspective, large appliances made sense, from a customer point of view it was not making sense,” said Karwa. “People were not considering us when it came to purchase decisions about large appliances—when they were thinking of buying their next TVs, fridges or ACs, they were not considering Flipkart in the option set of where to buy or for that matter they were not even referring to Flipkart on what to buy. So, we decided to rebrand it.”

Despite the latest rebranding exercise, Flipkart remains the market leader in large appliances, although arch-rival Amazon India is aggressively expanding in this category and catching up.

Karwa reiterated that the large appliances business remained on track to more than double growth this year. In an interview in May, Karwa had said that the e-commerce firm expected sales of televisions, refrigerators and other large electrical appliances to more than double this year. Most of this growth is being driven by Flipkart’s flagship television business, with VU being its top-selling TV brand.

By 2018, TV sales in India are expected to touch $14.7 billion from $8.3 billion in 2014, according to a January report by India Brand Equity Foundation and TechSci Research, a market research firm.

Flipkart also plans to significantly ramp up its warehousing space for large appliances, ahead of the crucial Diwali sale season, where it is expected to have a potentially defining showdown for supremacy with arch-rival Amazon India. Flipkart typically hosts its flagship Big Billion Day sale during Diwali, while Amazon India holds a rival sale event called the Great Indian Festival.

“We’ve worked relentlessly over the last few years to open up new warehouses. The count of warehouses (for large appliances) is now 10. For the festival of Diwali, this count will go up to 17. So, it’s a massive ramp-up,” said Karwa.

Flipkart is not the only online retailer to aggressively expand warehousing space for large appliances.

In April, Amazon India opened seven new warehouses as part of a strategy to boost sales of high-priced products such as televisions, refrigerators and furniture.

Under CEO Kalyan Krishnamurthy, Flipkart has zeroed in on and identified high-value items such as mobile phones, home appliances and furniture as the biggest drivers of growth, while it is working hard to lower the cost of delivery of low-value products. Mint reported on 18 July that Flipkart was pushing to cut losses to prove it can build a profitable business. Flipkart has set itself a target of breaking even at the gross profit (GP) level by the end of the financial year by reducing discounts, and costs on logistics and warehousing.

The company has an advantage over Amazon in large appliances: its ownership of Jeeves Consumer Services Pvt. Ltd, an after-sales services provider. Flipkart acquired a majority stake in Jeeves for an undisclosed amount in late 2014.

Flipkart, which is also betting big on its strategy to maximize sales through lower-priced, high-margin private labels, plans to launch a private label for at least one of its key categories in large appliances. Karwa declined to share further details of the category.

Flipkart has already launched a private label for smaller home appliances called SmartBuy earlier this year.

“Around Diwali, you will see a private label play in one of the categories, but it’s not going to be in the bigger categories in large appliances such as TVs and refrigerators. Wherever we feel there are user gaps, we are trying to go out and do something there. There is some work happening there,” said Karwa.

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