Flipkart has a bold new plan – and it’s one that’ll keep the government happy

Photo credit: bswei / 123RF.

Ecommerce company Flipkart is going to launch a new private label under founder Sachin Bansal’s stewardship, three people directly aware of the company’s plans told Tech in Asia.

India’s Flipkart launched its first self-branded products, dubbed Flipkart Smart Buy, in December, focusing on phone chargers and data cables.

The aim is to gain higher margins for the Amazon arch-rival, which in turn could help with profitability.

Internally codenamed Project Ice, Sachin is planning to make self-branded items in more than 40 categories, including electronics and home furnishings. A rollout is expected by April.

Flipkart did not respond to an email seeking comments.

With the new label launch, Sachin and team are going after a higher-end market, with presumably only one end in mind for now – to source raw materials and manufacture in India, avoiding the usual made-in-China products.

It aligns Flipkart with the Indian government’s pet “Make in India” project, where the Prime Minister has been encouraging companies to tap the country as a manufacturing hub. A vast array of global tech players, including Apple, Foxconn, and Xiaomi have already bought into the idea.

Tax incentives

The launch of the Make in India campaign. Photo Credit: Wikimedia.

There are tax benefits and subsidies that sweeten the deal. As per the Make in India site, “in order to boost manufacturing of electronics, the government of India provides a capital subsidy of up to 25 percent for 10 years.”

“As of now, the new label does not have a mandate to make profits, it just has a mandate to set up a Make in India base,” two people aware of the developments told Tech in Asia.

“This has been in the works for months now,” another source said. “It sort of got put on hold when Kalyan came in, but it’s back now.” Kalyan Krishnamurthy is Flipkart’s new CEO, who took charge earlier this month.

See: Amazon India losses double, but so do revenues

While private labels are a great way to build a business, the bigger strategy here is in how Flipkart is trying to hit all the right notes with this one move.

2016 was a trying year for the startup, including markdowns, employees leaving, CEO changes, and some very avoidable faux pas.

Binny Bansal (left) and Sachin Bansal are the two co-founders of India’s top homegrown ecommerce startup. Photo credit: Flipkart.

Sachin Bansal himself ruffled quite a few industry feathers when he joined Ola CEO Bhavish Aggarwal in asking PM Narendra Modi’s government to make policies which favor homegrown companies, similar to China’s protectionist policies.

Building a homegrown brand that sources locally is set to earn Flipkart some easy brownie points with the government, with which India’s ecommerce sector has had a tenuous relationship in the past.

See: Amazon and Flipkart may be in trouble after India’s policy change. Snapdeal is happy

If Flipkart’s self-branded products take off, they could be a key differentiator from Amazon, which last year launched a “Make in India” store.

“‘Make in India’ connects with our mission to transform how India buys and sells and we are thrilled that it will provide further impetus to Indian manufacturing, allowing customers globally to access Indian innovations and creations,” said Amazon India head Amit Agarwal.

Flipkart’s moves to lobby the government for support comes as it’s reportedly in the market to raise more funds.

Durba Ghosh contributed to this article.

This post Flipkart has a bold new plan – and it’s one that’ll keep the government happy appeared first on Tech in Asia.

from Tech in Asia https://www.techinasia.com/flipkart-to-launch-another-name-brand
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