Taking its private label strategy beyond electronics, fashion and furniture, India's largest e-commerce company Flipkart has launched its first in-house brand for large appliances, MarQ.
The e-tailer, which plans to sell TVs, washing machines, air-conditioners and speakers, among other products, will undercut top brands with similar specifications by 15-20%, it said in a statement. Jeeves Consumer Services, its after-sales service arm, will offer maintenance, repairs and warranty on MarQ products.
Is aggressive pricing on these big-ticket products enough to garner a sizeable share of the market? What will it take to replicate the success of Myntra's private label vertical, which recently turned profitable?
A look at Flipkart's previous experiments with private labels gives some clues.
Flipkart launched DigiFlip, which sold digital accessories like laptop bags and camera pouches, in 2012. Digiflip sold laptop bags for Rs 500-1,100, laptop skins for Rs 350-400, camera bags for Rs 1,099, and camera pouches for Rs 200-500. In 2014, Flipkart entered the already-crowded domestic tablet market with a new offering under its private brand, Digiflip Pro. The tablet offered a 7-inch display and ran Android Jelly Bean. Targeted at the budget segment, it was priced at Rs 9,999.
After more than four years, however, Flipkart discontinued DigiFlip in December 2016.
At the same time, hoping to be second-time lucky, it launched private label Flipkart SmartBuy. Under SmartBuy, it offered products ranging from home furnishing, kitchen & dinning, health & personal care to mobiles and computers, home decor, and furniture.
In June 2017, media reports suggested that Flipkart was building a budget brand called Billion across electronics, appliances and accessories to attract new shoppers. According to a report in financial daily Mint, the company was also entering the mobile devices segment by rolling out a budget phone to compete with offerings from Xiaomi and Micromax.
One area where Flipkart has tasted success is fashion, with Myntra's private label vertical turning profitable and registering a positive EBITDA of 5% in June. According to Ananth Narayanan, chief executive of Myntra and Jabong, Myntra Fashion Brands registered 100% year-on-year growth and is on track to yield $300 million in revenues by the end of this year. The fashion e-tailer is expected to sustain an EBITDA positive rate of 3-5% in the long term even as it continues to grow, he said at a press conference in August.
Myntra currently has 13 private labels including Roadster, HRX, Mast & Harbour, Dressberry, Ether, Anouk, K&K, Harvard, and Invictus. These contribute close to 23% of its total revenues. Myntra launched its private labels on group company Jabong about 15 months ago, and they currently account for 7-8% of Jabong's total sales.
Will MarQ succeed?
Experts feel replicating the success of private labels when it comes to large appliances won't be a walk in the park.
“Appliances are bought for four-seven years unlike apparel, which lasts maybe six months. So a 10% price difference is not enough to create a market for a private label,” Anup Jain, founder and managing partner at Redback Advisory Services, had told VCCircle in June.
Besides, when it comes to apparel, the unbranded segment is sizeable. "But in case of appliances, the unbranded segment is quite small," Jain had added.
However, some experts feel the category is large and growing, and Flipkart can capture a portion of the market if it gets the basics right.
"Consumers are willing to try out new brands, but success would depend on the kind of infrastructure the company puts in place for installation and after-sales service," said Arvind Singhal, chairman of retail consulting firm Technopak Advisors.
“The biggest concern for customers is how quickly the service is done and the cost associated with it. This requires significant infrastructure investment on the ground. People need to be trained and spare parts and accessories have to be readily available. Consumers give up on the best of the brands sometimes because the quality of service is not good,” he explained. Leave Your Comment