Flipkart to help local firms to sell licensed global brands

India's largest e-commerce firm Flipkart has launched a pilot project to bring together international brands and local sellers on its platform to ease the process of licensing, as it eyes higher earnings through sales of more expensive branded products.

The gross value of licensed products sold in India is over $2 billion (Rs 13,000 crore), which is predominantly offline. Flipkart hopes to bring this online, while helping brands easily tap its already existing base of sellers and using analytics to help them plug leakages in royalties. Global media company Viacom is the first firm to license three brands - Teenage Mutant Ninja Turtles, Spongebob and Peanuts to Flipkart's sellers.

"The licensor of the brands, which are being licensed, can be from any country and primarily they are looking at India as a market. So, they are looking at partners who they can work with to license these brands to the right sellers or manufacturers," Manish Maheshwari, head of seller ecosystem at Flipkart said in an interview.

The brand licensing programme is part of Flipkart's various seller initiatives, which include facilitating short-term capital loans and even procurement of raw materials. The move is aimed at promoting sales of authentic products on its platform, acting as an intermediary between brands and its own sellers. "I think marketplaces in India have done a great job for the past three years and now they have to integrate and aggregate global brands. Due to high import duties in the country, brands will not be able to directly bring their products to India, because of which they will license them," said Gaurav Marya, representative of the Licensing Industry Merchandisers Association in India.

While the exact terms of deals were not disclosed, Flipkart will aid its sellers to get licences to produce branded products paying royalties between seven and 12 per cent. With India slowly emerging as brand conscious market, the company thinks its sellers will comfortably be able to charge a premium from customers for these branded products. This in turn will help Flipkart improve margins.

Apart from large fashion brands, which have the capability to set up a manufacturing and distribution channels in India, most international companies find it very hard to enter the market, adds Marya. Flipkart and other marketplaces, he says, will be able to tell brands to share their design capabilities and IP to have sourcing points within the country.

"Today if a seller has to start a business, building a brand takes years. Through this process, they can choose to partner with a brand and can differentiate themselves and more easily to start getting sales," said Maheshwari.

Flipkart has created a template for global companies to license brands to local firms. It will ask its sellers to maintain online exclusivity for products licensed through it. Moreover, the brand licensing programme will be open only to more advanced sellers on Flipkart's platform, who have a proven record of sales and quality products.

"By doing that we're completely changing the whole game, not only for our sellers who can now get authentic brand licences to sell on Flipkart and create better experience for buyers, but it's also a game-changer for all international brands," said Maheshwari.

BRINGING THE ECOSYSTEM TOGETHER

• Viacom will license its Teenage Mutant Ninja Turtles, Spongebob and Peanuts brands through Flipkart
• The gross value of brand licensed merchandise sold in India is over $2 billion annually
• Royalties on brand licensing deals vary from seven to 12 per cent of the price of the product
• Due to high import duties, international brands have not been able to bring products to India directly