Flipkart to invest in tech, new categories to grow market share
FLIPKART: Flipkart plans to focus on newer metrics to track its overall market share growth and concentrate less on traditional e-commerce parameters such as gross merchandise value (GMV), even as the online retailer looks to invest heavily in technology and new categories such as groceries. The steps are part of a broader Flipkart strategy to maintain its market-share edge over rival Amazon India.
In an interview, Flipkart chief executive officer Kalyan Krishnamurthy claimed that the company had a “disproportionate amount of market share” in Indian e-commerce and indicated that the online retailer’s intent is to focus on metrics such as active transacting customers and frequency of transactions on its online marketplace.
Flipkart has repeatedly claimed over the past year that it controls well over half of Indian e-commerce.
Analysts and e-commerce executives estimate that Flipkart, which owns online fashion retailers Myntra and Jabong and payments app PhonePe, controls roughly 40-45% of the Indian e-commerce market.
“Our monthly active customer base has grown 75-80% in the last one year, and as we look into next year, we’re hoping it grows minimum 2.5 times. So, that’s a big metric that we’re driving towards. The second metric that we are focusing on is frequency of transactions—the number of times the Indian customer shops online in a year. These are key metric focuses for us (in 2018),” said Krishnamurthy, who has now completed exactly one year as Flipkart CEO.
To be sure, this is not the first time that Flipkart has indicated that it will focus more on metrics other than GMV, or the value of goods sold on a site after discounts.
In an interview in May 2016, Flipkart co-founder and thenCEO Binny Bansal had indicated that net promoter score (NPS, a key measure of customer satisfaction and loyalty) had become the most important metric at the company.
“Because of the disproportionate amount of market share that we have, we have moved away from metrics such as GMV. Clearly from a growth point of view what we will want to achieve is customer count growth and the velocity of transactions, frequency of transactions, etc. That’s the growth which we will focus on,” Krishnamurthy added.
Analysts estimate that top online retailers such as Flipkart and Amazon have roughly 15-20 million active monthly customers. Krishnamurthy added that Flipkart is now focusing heavily on solving key problems in Indian e-commerce, such as building out a meaningful online grocery business—a category that Flipkart launched late in 2017 in Bengaluru and plans to expand to other cities over the next 6-12 months.
“We’re now thinking about the next 5, 10, 20 years of how we can shape the market, how we can innovate for the market and offer solutions for customers in businesses and categories which today are not very feasible in India. For example, grocery e-commerce... These are the things that we are going for, rather than optimizing for GMV and meeting our numbers,” said Krishnamurthy.
Flipkart has engineered a turnaround in its performance over the past 18 months under Krishnamurthy, a former Tiger Global Management executive who was brought back to the company by alarmed investors in June 2016 as Amazon India went all out to overtake the local rival. It intends to keep the edge it has regained.
“We will invest disproportionately in technology. We will see technology, data science and AI (artificial intelligence) driving all aspects of our business and P&L (profit and loss), including customers and categories, including cost structures. So that will be a very big focus for us next year,” said Krishnamurthy.