India: Flipkart hopes F1 Info Solutions acquisition will give it an edge over Amazon

The Flipkart delivery process. Photo: Bloomberg

Online retailer Flipkart Ltd is betting that its acquisition of F1 Info Solutions, which offers repair services for mobile and electronics, will provide the company with a defensible asset in the key category of smartphones against arch-rival Amazon India.

If Flipkart’s bet plays out, it will be its second key offline acquisition after Jeeves Consumer, an after-sale service provider in large appliances. Jeeves has turned out to be an important differentiator for Flipkart in its market share battle against Amazon India (Amazon Seller Services Pvt. Ltd) as after-sales services such as installation, product demos and repairs in televisions, refrigerators and other large appliances are typically inconsistent and difficult to crack.

The F1 Info buyout may give Flipkart similar advantages as Jeeves, which will absorb F1 Info. Started in 2012, F1 Info has 158 centres offering repairs and other services.

“This (acquisition) is part of Flipkart’s broader vision to provide after-sales service in all the big categories that we serve. If you look at the value proposition that we are trying to communicate to brands and to customers, it is that as a platform we are able to take care of you not just during pre-sales and sales period, but even for important categories such as large appliances, mobiles, furniture, etc., where the lifetime value of the category is relatively more important and the customer is worried about what happens to their products after they buy them,” said Abhijit Upadhye, CEO of Jeeves Consumer.

The acquisition is important as smartphones contribute more than 50% of all e-commerce in India. Flipkart has dominated this category for most of the last four years but over the past few months, Amazon India has been pushing hard to catch up with its local rival. Some key brands such as Xiaomi and Lenovo are alternating between Amazon India and Flipkart, indicating that the gap between the two in terms of being the preferred retail platform of key smartphone brands isn’t as wide as it once was.

To protect its lead in smartphones, Flipkart has launched offerings such as no-cost EMI and product buyback schemes. But many of these offerings are also being offered by Amazon. The buyout of F1 Info is another step by Flipkart toward trying to offer differentiated services in smartphones and staying ahead of its American rival.

“What this helps us do potentially—firstly, there are a couple of brands that we have partnerships with. There are a few brands that Flipkart has partnerships with, but F1 doesn’t. So, that’s a clear direction for us—how we use F1 to partner with some of the brands that Flipkart has a deep relationship with. Secondly, we’ve started a number of services and products on Flipkart where we launched extended warranty, etc. Now all of these have to be powered with some repair partner. So, it makes natural sense for us to leverage F1’s capabilities to do that for customers. There are services like pick up and drop at customers’ homes that we are looking at. The options are endless. But our first priority would be to increase the brand coverage through F1,” Upadhye said.

Before the F1 acquisition, Flipkart provided some post-sales services in smartphones through Jeeves, but lacked a comprehensive end-to-end network.

“We are trying to connect that end-to-end cycle. We did this two years ago, when Jeeves was acquired. Jeeves was primarily focused on the large appliances category and later furniture was also added to the portfolio. So, we added that consumer lifecycle journey by acquiring Jeeves. After that, we wanted to do the same with mobiles and smartphones as a category. And that’s where F1 fits in. Either it was a question of Jeeves building this capability or figuring out a way to accelerate that journey through an acquisition. We were happy that we found F1 which does that for us,” Upadhye added.

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This article was first published on Livemint.com