Flipkart has launched the mobile servicing subscription programme to cover Asus phone Zenfone Max Pro M1, but intends to expand coverage to all smartphones in less than three months.
The newspapers maybe filled with reports of Walmart and Amazon wooing Flipkart, but the management at the latter is ensuring the courtship does not distract from daily business. Especially considering how this year's festive season sales are now less than six months away, and preparations need to start at full scale to ensure battle readiness.
It is in this context that we need to view the announcement of the programme that Flipkart is calling 'Complete Mobile Protection'. At an introductory pricing of Rs 49 a year, Flipkart's smartphone customers get coverage for all service requirements. This is apart from the warranty provided by brands. The programme was launched along with Asus Zenfone Max Pro M1, which went on sale at 12 noon on Thursday, and was sold out in minutes. Flipkart intends to integrate this programme with all the smartphone brands it sells in under three months, well in time for 2018's Big Billion Days (BBD) sales.
For smartphone customers, we will become the single-point of contact for all service-related issues. The customer will have to just call Flipkart. We will send someone to your doorstep, pick up the phone, fix it and return it to your doorstep. The longest time taken will be 10 days for the remote locations that we cover. In metros, we will be able to do this in under three days," says Ayyappan R, Senior Director (Head of Mobiles) at Flipkart.
Primacy of mobiles
Mobile phones continue to be the biggest category for Indian e-tail. Ayyappan declined to reveal the exact contribution of mobile category to the company's GMV - only saying that mobile is "one of the largest categories" for Flipkart. However, post-2017's BBD sale, Kalyan Krishnamurthy, in an interview with YourStory, had disclosed that mobile is Flipkart's largest category in terms of GMV.
Flipkart says one in four smartphones bought in India - online or offline - is on Flipkart, resulting in the company having a 25-percent market share in the category. In online retail, the Bengaluru-headquartered company is claiming over 75-percent market share.
Earlier this month, during the announcement of the Flipkart-Asus partnership, Ajay Yadav, Flipkart's VP (Mobile Phones and Large Appliances), had claimed that the company saw 60-percent growth in the category, while the industry overall grew at 14 percent. The company also announced that it is targeting a 40-percent market share in the category in 2020.
There is a strong reason for this focus on a single category. Mobiles account for 50 percent of all e-tail GMV in India, and the category is registering a growth rate of 51 percent, according to data by advisory firm RedSeer Consulting.
While Flipkart initially focused on price and exclusive brands to capture market share, in recent months, it has focused on offering affordability features like no-cost EMI, product exchange and guaranteed buyback to get more customers buying mobiles on the site. These are the features, Ayyappan says, that helped the company capture 25-percent market share, with around two out of three phones sold on Flipkart having some affordability link.
He says consumer feedback showed that repair of the phones is a big pain point for consumers. Their research showed many customers did not know what services were covered under brand warranty, they didn't know which service centres were good and how much time and cost it would take to get their phones repaired. These are the issues that Flipkart is attempting to solve with the programme.
Flipkart is able to roll out this feature, thanks to its acquisition of F1 Info Solutions, a mobile and IT products repairs and service company, last September. F1 is the authorised service partner to most of the mobile phone brands in the country, and has a network of 168 centres in 150 cities. F1 is now part of Jeeves, Flipkart's installation and services arm. Ayyappan adds that Jeeves, along with F1, and Flipkart's logistics arm Ekart, will work closely to ensure smooth service experience for its customers.
F1 handles over 85,000 service calls every month and Flipkart is ramping up its capacity in time for BBD. Ayyappan says the target is to ensure at least half a million phones are sold with this programme in the next six months.
For Flipkart, it is very important to build on its leadership in the mobiles category to stay ahead of competition, especially with Amazon. While, earlier, Flipkart would get all the exclusive partnerships, now Amazon too has its share of exclusives. For instance, OnePlus 6 will be sold exclusively on Amazon in India from May 17. This is why Flipkart needs to keep introducing newer features that are in sync with consumer requirements, to ensure that customers come to Flipkart for reasons beyond just price and brand.
The category performance during this BBD and during the festive season overall will be very important, as sales during the period accounts for a chunk of the year's GMV for online retailers. Flipkart needs to have a blockbuster BBD this year in the mobiles category not just to ensure it reaches the 40-percent market share in the next 20 months or so, but also to ensure it continues to stay ahead of Amazon.