Flipkart aims to expand into new categories via SmartBuy

Photo by Livemint

Flipkart plans to expand its biggest private label SmartBuy across at least 100 categories by the end of the year, a top company executive said, as India’s largest online retailer aims to generate roughly one-fifth of its overall sales from private labels over the next three years.

New businesses such as sports and fitness accessories, stationery and general merchandise will sport the SmartBuy brand, which was launched in 2016. The brand is currently present in 65 categories such as home appliances and mobile accessories.

“The first big range that you’ll see coming under SmartBuy very soon is actually sports and fitness accessories… The other new range that the brand will get into is stationery and general merchandise, like keychains, notebooks, pens, diaries, etc. And then we’ll expand further into categories where we are already present in. For instance, home appliances is big business as a category and so is mobile accessories,” said Adarsh Menon, vice-president and head of Flipkart’s private label business.

Private labels are a key asset for online retailers, since they typically fetch higher margins than third-party brands.

For Flipkart, the launch of SmartBuy and other private brands was part of a strategy to reduce its dependence on its flagship smartphone business and also improve margins.

Flipkart currently has at least eight private label brands including Billion, which was co-founder Sachin Bansal’s personal project at the company.

Mint reported on 27 June that Billion has now been merged into the overall private brands business of the online retailer, after Bansal’s ouster from Flipkart following a bitter tussle with the board during its acquisition talks with Walmart Inc. in April.

Prior to Bansal’s exit, Billion stood apart from the other private labels and was being run as an independent unit by him.

For categories like fashion, large appliances and furniture, Flipkart has launched other private label brands such as Divastri, MarQ and Perfect Homes.

Flipkart also launched a private label for its grocery business recently. If Flipkart’s private label push is successful, it will help the company reduce its dependence on smartphones, which contributes a majority of its sales but is a money-losing category.

Menon said SmartBuy will address gaps in Flipkart’s portfolio and make products more affordable.

“When we looked across all the categories that we sell on the platform, we realized there are a large number of categories where there are pretty big gaps in the quality of the selection that the platform offers. Basically this means that the selection available is either not of great quality or the products that are of high quality are way out of a customer’s reach… So, Flipkart SmartBuy was conceived with the notion that the brand has to play in everyday kind of products and has to deliver great quality selection to customers at great prices. That’s how the brand took shape a year and a half back,” said Menon.

Flipkart is not alone in focusing on private labels.

In February, Amazon India vice-president Manish Tiwary told Mint that the company was looking to rapidly scale up and expand its private label business by launching brands in new categories this year.

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This article was first published on livemint.com