Ecomm sales have picked up since August: Flipkart group CEO Kalyan Krishnamurthy

The Walmart-owned e-tailer expects to clock similar growth rates to last year’s festive season even as the Covid-led boost for online businesses – which benefited players like Flipkart – starts to wear off.

Compounding challenges for consumption-led businesses are inflationary pressures and the macroeconomic uncertainty, which usually deters purchases, especially of high-value items such as smartphones and other electronics. But as shoppers move towards value-driven products, Flipkart will focus on expanding its price points, mainly targeting users in smaller cities and towns, Krishnamurthy said.

The Big Billion Days sale, a property it launched in 2014, and Amazon’s Great Indian Festival Sale both begin on the same day, a tradition which has been followed by the two ecommerce majors over the past several years. The month-long sale has sparked many battles between the two companies as they fight to lure Indian consumers to buy online.

So far this year, the ecommerce sector has seen consumption growth moderating across categories, especially in segments considered to be discretionary. As per estimates from market research firm
PGA Labs, ecommerce shipments are expected to grow 20% annually in the ongoing financial year, ET reported in July. This is a lower rate of annual growth compared to the last two financial years, especially FY21.

“In general, 2022 has been a little bit lower in terms of growth compared to last year – which is partially because last year was a pretty big year… But somewhere in the middle of the year, we did see some macro-related consumption headwinds. The past few weeks, though, have been better. The momentum has picked up,” Krishnamurthy said.

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“We are seeing good growth getting into the festive season and want to set the tone for accelerated growth next year,” he said. The Flipkart chief added that despite a cautious outlook, the company will continue to invest big over the next month to push new categories, bring more sellers onto the platform, and bolster its supply chain and delivery fleet to meet the increase in demand.

“We are offering a selection at as many price points as possible so that it is a very inclusive Big Billion Days festival (for residents of tier 2 to tier 4 towns). That’s a big part of the value proposition this time,” he said, adding the company will over-index on selection across price points.

Cautious but will invest in core biz


Having recently spoken about the tech slowdown after two years of exponential growth and how Flipkart will be entering a phase of capital conservation, Krishnamurthy said that while the etailer has been cautious, this won’t impact its investments for the festive period and on supply chain, engineering and marketing. “In none of these will there be any kind of budget reduction. These are not the areas where we will reduce our investments – absolutely not,” he added.

Flipkart has been acquisitive over the past two years, having bought travel portal Cleartrip, epharmacy startup Sasta Sundar, and ANS Ecommerce, a full-stack ecommerce enabler, besides making investments in startups such as Ninjacart and Shadowfax.

“Are we being more careful in deploying capital in general? Yes. But it’s not that we are compromising on investments towards consumers… We are taking a more cautious view on capex, discretionary M&A and any kind of experimentation,” he said, adding the etailer has expanded into several new categories beyond product commerce.

“A lot of these, we got into in the last one to two years. We want to make sure that we deploy our capital and invest behind the existing business,” he added.

A report by research and brokerage firm Bernstein estimates festive sales contribute as much as 18-20% of total annual sales, showing why Indian ecommerce companies go full throttle during this period. The report said gross merchandise value, or GMV, reached $9.3 billion in October last year – at an annual growth rate of 26% – with Flipkart cornering a 62% share and Amazon India 27%.

ET reported on September 4 that while Flipkart will push new categories like travel, live commerce, Shopsy (which competes with Meesho at the lower end of the market), easy financing options and its loyalty programme through SuperCoins, Amazon is offering a 50% fee waiver for new sellers and launching live commerce just days before the sale begins. Flipkart said its loyalty programme Flipkart Plus has 20 million members.

Flipkart has added 50,000 additional associates for festive season deliveries this year, taking its total team size, including on-roll employees, to over 2.5 lakh.

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No credible ecommerce playerIndia’s top 10 cities are now a relatively small part of Flipkart’s total business and that the next 30-100 cities are driving the majority of the growth for the Bengaluru-based firm, said Krishnamurthy, who was earlier a senior executive at Tiger Global, one of the earliest and most influential backers of Flipkart.

“Our business from the top 10 cities is quite small, and the growth is heavily driven by these 30-400 cities,” he said.

Flipkart, which competes directly with Amazon, has also seen new players such as Meesho emerge in the past year or so. The big slice of the market, beyond the top metro cities, is where the likes of Meesho have tried to challenge the incumbents.

But Krishnamurthy said they don’t see any “credible player” in the ecommerce industry. “Ecommerce is not a simple industry – you need very deep capabilities to solve businesses like these… At the moment, we do not see any credible player who has been able to solve ecommerce across the board – product discovery, reach, value, and post-transaction service.”

Festive sale 2014 vs 2022

Krishnamurthy said the festive sale has evolved in the past eight years from being just an event to bringing new shoppers online for the first time. “I won’t say it is necessarily a very big driver of new user adoption but a lot of experimentation does happen at the user level,” he said. “This is also the time when we go live with various new products and features as it creates a multiplier effect for the ecosystem, comprising sellers, brands and also the internal teams.”

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After testing live commerce in February, Flipkart is expected to leverage it across categories, including smartphones. Typically, live commerce is focused on selling fashion and beauty products.

“Both live commerce and Shopsy are very important. If you look at the aspirational user base in tier 3 and tier 4 towns for fashion and general merchandise, it’s already the single biggest platform for consumers in a matter of 1.5 years. We have ambitious plans for it as we get into festive season and next year as well,” Krishnamurthy said. “Through the month, we will have several live commerce events – not just in fashion but across categories like smartphones.”

While smartphones and large appliances will continue to be in focus, Krishnamurthy said fashion remains one of the largest segments for new users to come to Flipkart and make purchases for the first time.

“Fashion is one of those categories where a huge number of consumers in India come to ecommerce platforms for the first time. That said, devices and appliances still do play a big role, because culturally, people find it auspicious to buy [expensive] products – and that continues to be the case,” he said.