Flipkart shuts e-books unit as business bleeds

The move is an indication that the online marketplace wants to be a platform for its vendors to sell goods than building its own products

India's largest online marketplace Flipkart shut down its e-books business on Friday to cut losses as it found few takers to read books and novels on electronic readers, smartphones and tablets in the country.

The move is also prompted by the e-commerce marketplace's increased focus to be a platform for its vendors to sell goods and services than building its own products and services.

"In an overall strategy for books, Flipkart does not see the eBooks service as a strategic fit and hence the decision of transitioning the eBooks service to Kobo," said the company in a statement.

Flipkart began its e-books business three years ago to take on rival and the global leader in e-books and e-reader business Amazon. It will continue to sell e-books on its platform, but all sales will now be routed through Canadian e-reading firm Rakuten Kobo, which claims to have over four million e-books on its website.

In 2007, Flipkart started out exclusively as an online seller of books. Since then, the company has transformed itself to sell everything from smartphones to apparel to large appliances, with a focus on selling higher value goods on its platform.

e-books isn't the first business/service Flipkart has exited. In August last year, the company shut down Payzippy, it's payment portal, a little over a year after starting it. It also has shut its music streaming service Flyte in 2013 citing lack of infrastructure for micro payments and music piracy.

Globally, the e-books business enjoys low margins making it sustainable only when there are high volumes, making it very possible that Flipkart was bleeding cash. Flipkart India and Flipkart Internet, the two companies whose information is public, has pledged assets to access credit facilities worth over Rs 1,400 crore from commercial banks as losses mount. Flipkart lost Rs 1,993 crore on sales of Rs 10,390 crore in 2014-15.