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    Flipkart to allow big brands to create exclusive 'stores' on the digital marketplace

    Synopsis

    This move by Flipkart, with the offer to help brands exercise control over how and what they showcase to customers using data, aims to build a symbiotic relationship.

    ET Bureau
    BENGALURU: Flipkart is wooing some of the most-popular electronic and apparel brands with a new offering that allows them to create exclusive “stores” on the digital marketplace of India’s largest online retailer.

    These stores, launched in April on the Flipkart mobile app with a desktop launch expected later, help top brands target customers and drive sales by using data and analysis provided by Flipkart, as the Bengaluru- based company accelerates the process of driving revenue and trimming expenses to retain its leadership in the fiercely competitive online retail market.

    “The response till now has been encouraging,” said Surojit Chatterjee, Surojit Chatterjee, Senior Vice President and Head Consumer Experience & Growth at Flipkart about the initiative that has already found customers in the form of HP, Samsung, Wildcraft, Puma, Peter England, Bosch, Vu Technologies and @Home.

    Also Read: Flipkart stake marked down 20% further by 2 investors

    As a part of this initiative, Flipkart will create a self-service analytics platform called ‘Brand Hub’ where companies can target specific customer pools based on products. They can display products to specific customers based on parameters such as gender or the income bracket. In turn, customers can follow particular brands and be alerted when collections are updated.

    “It’s a way for brands to reach out in a very personalised manner while customers can discover their favourite brands, including new launches,” said Chatterjee who claims his company has over 75 million registered users and over 50 million mobile application downloads.

    Experts are of the view that this initiative is in large part driven by the demands of brands themselves. “Samsung, for example, may not want to sit next to other brands,” said Harminder Sahni, founder and managing director, Wazir Advisors, a retail consulting firm. “Leading multinational brands are more powerful than Flipkart as customers still search for brands especially for high-value items.”

    Top brands have had a fractious relationship with online retailers and have objected in the past to deep discounting practices followed by these investor-backed ventures.

    This move by Flipkart, with the offer to help brands exercise control over how and what they showcase to customers using data, aims to build a symbiotic relationship.

    “It is a good platform for brands to create a page which is coherent with their philosophy, giving us a canvas which is different from the cataloguing format,” said Devita Saraf, founder of television maker Vu Technologies, which clocked Rs 275 crore in sales in FY16, majority of it online.

    Flipkart’s Chatterjee said his company will make use of the large amount of customer behaviour data based on past purchases to help brands target potential customers more effectively. While the move helps brands build a closer relationship with customers, it will also help differentiate themselves to the buyers, according to experts.

    The initiative — one of several launched since Flipkart went through a management restructuring in January that saw the elevation of cofounder Binny Bansal to the chief executive’s chair — is aimed at stepping up efforts to earn more revenue. Although the eight brands which have signed up are still testing the service, Flipkart is not yet charging them a special fee. A person familiar with the matter said that ‘Brand Stores’ will be an adjunct to the advertisement business, which is expected to be a revenue booster for the Tiger Global-backed company, which said it would sell goods worth $10 – 12 billion by June 2016.

    Flipkart is looking to cut the burn rate, or the money it uses to grow business, and target gross profitability by September this year. While one leg of this strategy is to cut marketing expenses and other costs, another is to tap the existing customer base by increasing repeat purchases and monetising traffic through ads and data analytics.

    This is important as the company, which was valued at $15.2 billion in its last round of funding, has since seen a series of markdowns by investors like Morgan Stanley and T Rowe Price. The latest markdown came last week, when Fidelity Rutland Square Trust II and Valic slashed the value of their shares in Flipkart by 42% and 31% from peak levels.

    The company, which competes with Jeff Bezos’s Amazon and Soft-Bank-backed Snapdeal, is looking to stay the leader in a market expected to be worth $68.8 billion by 2020, according to Goldman Sachs.

    ‘Brand Stores’ will also help Flipkart align its advertising strategy more closely with its approach to sellers and top brands selling on the platform.

    Flipkart launched a programme last year to work more closely with top sellers, not more than 100, on its platform in terms of warehousing and customer delivery experience, ETreported last month.
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