After wrapping up three unsuccessful private labels months ago, online marketplace Flipkart has launched its own private brand called ‘Flipkart Smartbuy’. Starting today, the umbrella brand will start selling electronics and home categories. By April, they plan to launch 50 categories, which they claim will be of high quality yet affordable.
Flipkart’s previous private brands Digiflip, Flippd, and Citron were in the market till early this year. But Adarsh Menon, Head of private label at Flipkart who replaced Mausam Bhatt a few days ago, says: “Brands need to stay relevant to consumers always. For that, we need to meet customer demands on quality specifications and price. Digiflip and Citron were not doing that. The smartest thing to do then is to learn from the mistakes, and then wind up the brands,” he adds.
This time around, Flipkart seems better prepared. Starting with cables and chargers, electronics under ‘Flipkart Smartbuy’ goes on to include headphones, earphones, power banks, and speakers, while home category will include tiffin boxes, water bottles, jars, and containers. Post January, Flipkart Smartbuy will sell appliances, home décor, furnishing, furniture, and apparel. The plan is to sell sheets, mixies, blenders, etc., from February and apparels from April under the same umbrella brand.
Preparation for months
According to Adarsh, a new team of a select few brand and sourcing experts has been working on this for the past six to eight months. Investment has gone into consumer research which revealed significant need gaps that exist across many categories, which the private label hopes to fill, he says. Also, they have invested in setting up a sourcing ecosystem and quality processes, as well as building a leadership team to conceptualise and execute the programme.
Although order volumes and prices vary with categories, Flipkart is targeting more than 70 percent of unbranded categories, and 15 percent for branded ones. Adarsh says that their private label would provide the best price for the quality. “The focus is on fulfilling the gap. Value – not price – matters in succeeding,” he adds.
The logistics also takes time. For instance, most power banks are heavy. So Flipkart Smartbuy aimed to build a powerful but lighter version. “We worked with factories in India and China to create the product. They are certified for quality from the manufacturing unit itself and then shipped to warehouse. There, they undergo another round of quality check,” says Adarsh.
‘Flipkart Smartbuy’ products will be sold by all the sellers who have achieved ‘Flipkart Assured’ badge. They will have the inventory.
Adarsh says that besides face-to-face consumer research, their tech assisted in collecting customer data by using artificial intelligence in determining need gaps and how a customer interacts on the platform – when they drop off, when they compare with other platforms, etc.
Merits of private label
With a private label, the company does not own manufacturing but works very closely with manufacturers to ensure high-quality products. So they provide bigger profit pool and let the marketplace do control quality. Adarsh claims that every item under the private label undergoes tests to be certified by all regulatory bodies. “Customers will be benefited since we can reduce costs in sourcing. But returns will go down only if you give very good quality at an affordable price consistently. Besides, if the consumer trusts a brand, it increases the propensity of buying other items from the brand,” he adds.
However, Adarsh says, marketing a private label comes with the same challenges as for any other brand. “We are keen to use Flipkart platform extensively – as 15 million people are checking us out every day. We know what time they come online, what they are interested in, etc. If putting Flipkart Smartbuy products can be given a push by being shown on the top of the product list, we will do that,” he adds.
In FMCG, biggies like Big Basket and Amazon have launched their own products, as did Urban Ladder and FabFurnish in furniture. Amazon has also taken upon fashion category with its private labels. In fact, Big Basket has tied up with offline stores as well to see their private label goods. ‘Flipkart Smartbuy’ will sell only online.