Flipkart aims to penetrate tier 2 cities; to focus more on value than speed

E-commerce platform Flipkart has decided to focus on tier-2 cities of India and resort to value play instead of delivery speed, taking a long-term view of its business strategy in the country .

Flipkart is of the view that this differentiator will work in its favour to grow its business further.

“From being a start-up unicorn, we have emerged as a sizeable company and there is a need to take a long-term view to grow the business for the future. We have been focussing on tier 2 business but it has become more intense now. We want to be a value player focussed on tier 2 locations”, Rajneesh Kumar, chief corporate affairs officer at Flipkart, told Business Standard.

Since, fashion is the biggest category for India's largest online retailer, sales from tier 2-3 locations now account for around 70 per cent of the total sales and the micro-small sellers account for 80 per cent of the total sales in terms of value.

Kumar said that the focus of the firm is on offering products at the best possible price so that value-seeking consumers can be tapped. “Delivery (speed) will follow automatically”, he said.

The focus on rural and semi-rural belts come after US retail giant Walmart picked up a controllable 77 per cent stake in Flipkart for $16 billion in 2018.

Kumar said that although Walmart has representatives on the Flipkart board, it doesn’t intervene in its day-to-day operations. In effect, decisions are governed and taken by the board.

The company has been growing its seller base of MSMEs through direct reach and collaboration with industry bodies. The e-commerce platform now has 200,000 Micro, Small and Medium Enterprise (MSME) firms as active members on the platform. 

The online retail giant has also been focussing on roping in more artisans and has come up with the Samarth programme which has been designed to guide artisans to sell online and become familiar with the online model of sales. Under this initiative, artisans are helped with onboarding, cataloguing, account management, business insights, dedicated seller support, reduced commission where eligible, and warehousing support.

Flipkart has been working with NGOs and state governments to tap more artisans as well as rural entrepreneurs, with a special focus on women-led enterprises, differently abled entrepreneurs, artisans, and weavers, who often face obstacles such as lack of access to working capital, poor infrastructure, and inadequate training. 

According to the official, Flipkart has been benefitting form the slowdown as consumers are shifting to online ordering which offers better value than offline players.

“Because of our value proposition, we have been getting more business in times of the slowdown”, Kumar told this newspaper.