Private label business, even since it was launched in 2016, has always been in focus for Walmart-owned Flipkart, not just for having high margins but also for meeting the demands of value-for-money buyers that other brands may not be able to every time. Perfect Homes (furniture), Cara Mia (fashion) SmartBuy (home furnishing, kitchen and dining, electronics, mobile accessories) MarQ (home appliances), Billion (smartphone) Ann Springs (fashion), Miss & Chief (kids fashion), Divastri and Anmi (ethnic wear), and Metronaut (menswear) are Flipkart’s private label brands that are spread across 300 product categories and have customer feedback central to its growth, according to Adarsh Menon, VP, Private Brands, Flipkart. Menon talks about how Flipkart’s private label business has grown in the last two and a half years and its impact on the local ecosystem in interaction with Financial Express Online. Edited excerpts below:
How well are you able to leverage customer feedback in growing private label business?
We have about 10 brands in our private label business currently across around 300 categories. Around 10-12 per cent (of Flipkart) business comes from private labels. When we started private label business two and a half years back, we noticed a lot of categories had some gaps such as around selection, price, quality, technical specifications etc. So by working directly with manufacturers, we were able to plug those gaps.
Private label platform initially was built on two pillars made for Indian customers and made by Indian customers philosophy as the process for our product development begins with customer feedback. By developing in-house algorithms, we are able to look at customer feedback in lakhs of quantity to design and develop our products. We can include specifications that customers want and omit those that they don’t want as brands necessarily put them as per their global template. Hence, the right price and the right specifications products are made.
Could you illustrate what are those gaps?
Yes, for instance, customers want to buy AC, which saves them energy and is also low on price, but they may not pay the price as it is an expensive purchase. The customer feedback around price point, specifications, and features that they want actually create unmet demand. We work with manufacturers for private labels to deliver such products that fulfil these requirements. For instance, in the AC category, our brand private label MarQ is able to meet these unmet needs. We have televisions, washing machines under MarQ and we are launching a range of refrigerators as well. Then we have small appliances such as mixers, irons, fans, coolers, etc.that are completely made in India.
Our biggest strength is that we have a very intimate knowledge of Indian customers and the way they use their products. For instance, refrigerators in India are opened almost 2X a day unlike in other parts of the world. Hence, they are required much stronger cooling. For mixers, Indians want bigger jars because of the number of ingredients we put. So expectations of Indians from the products are very different and we understand that being a home-grown player.
How has that driven your focus to make products in India?
In the last around one and a half years, we have made in India as our third strong pillar for private label business as we work with Indian manufacturers and shift a lot of our sourcing to India. By doing that we are able to get even closer to what customers want. It works for us as well since the supply chain gets more efficient, our time-to-market reduces, customers are able to get products faster. It also promotes growth in the local ecosystem because we help local manufacturing grow and also employment gets generated. We have a good amount of technical know-how that we are able to share with our local partners. We will keep scaling up this strategy as we go forward.
Is there a difference in the discoverability or visibility for private label products and others?
For a new brand to start off with, it gets a certain amount of discovery and it for every category not just ones under private labels. After this, since the platform is merit-based, products that do well are visible more. Doing well is a function of how customers rate them and their delivery time to customers. We are tied up with 100 factories across India out of 150 factories for our various private labels across categories such as textiles, cookware, bedsheets, lot of electronic accessories and consumer durables that are sourced from these Indian factories. This discovery philosophy is a platform philosophy. We also consciously stay away from exclusivity with a particular manufacturer since in doing so you make products focused on yourself. If we don’t do that then we help foster an ecosystem that is India focused and also we are able to pass on our insights about the customers to the partners rather than a single partner. These partners can pass those learnings to those brands. This way, ecosystem benefits.
Any particular label or category you have in focus for the coming year?
We have an ambitious scale-up plan but there is no one category that we are more focused on. In the first year of the private label business, our focus was on establishing the proof-of-concept, which is very data-led and having algorithms used to make products along with a very strong sourcing ecosystem. Second-year was about making what we learned in the first year better and this year the focus has been to scale very wide and deep. We would also be expanding into new categories. Private label business is very much like a startup for us.