Flipkart is on the hunt again

Seventeen years is a long time in any era — for example, Flipkart we spent most of this time building e-commerce in India. But now, in 2024, e-commerce is more than just marketplaces.

Flipkart and Amazon India created what was long considered e-commerce, but now things are changing and fast commerce is the star of the show. At the same time, e-commerce is also expanding and becoming digital commerce, which means selling everything online — from electronics to fashion, unbranded products, insurance, travel and even personal loans.

The past year for Flipkart has been a time of seeing this market in transition. The company has tried various things to stay relevant, reportedly looking for startups to fill the gap, but now Flipkart is going it alone, launching its fintech product Super.Money in beta and targeting the fast-paced commerce vertical.

So this Sunday, we wanted to see how Flipkart is preparing for the brave new world of digital commerce. But first, here’s a look at the top stories from our newsroom this week:

New Flipkart

When Flipkart started in 2007, India’s internet economy was still in its infancy. It has matured only in the last eight to nine years after the 4G revolution made internet access commonplace for Indians. So it’s worth noting that for the first half of its existence, Flipkart was largely dependent on consumers from metropolitan cities.

And the truth is that Flipkart has always been chasing the ‘8’ from this turning point. That’s because even the internet revolution wasn’t as equal as many claim.

Consumers could access Flipkart, but logistical issues had to be resolved. Cash on delivery has been disrupted due to demonetisation. UPI largely resolved this issue after 2016, but in 2017 and 2018, markets suffered some setbacks in terms of policy decisions and e-commerce rules.

When Walmart acquired Flipkart in 2018, it was seen as a major endorsement for the company, but on the ground things were changing.

By 2019, the number of D2C brands was growing, and many were lamenting the over-reliance on marketplaces like Flipkart, which led to alternative channels, native stores, and more. This was of course true for both Amazon India and Flipkart.

Covid was another big disruption for Flipkart and in some ways it changed e-commerce for good. As all commerce moved online, Flipkart became part of this growing and evolving e-commerce ecosystem. As the pandemic spread into the economy, the main gap that needed to be filled was access to credit. The boom in digital lending shows just how wide the gap has been.

Since 2021, and increasingly over the past year, the game has shifted to high-speed trading and cross-selling, reigniting the super-app race. This is where Flipkart is at right now and one could argue that it is definitely heading towards becoming a super app itself.

Flipkart’s Fintech Dreams

The newest addition to the Flipkart universe is Super.Money, which currently supports UPI payments but will soon offer other financial services as well.

The cross-selling strategy is obvious when you see the introductory offers on Super.Money that include cashback rewards of up to 10% on Flipkart, Myntra and Shopsy.

Other financial products include a credit card offering in partnership with Utkarsh Small Finance Bank, a pre-approved personal loan service called ‘superCash’ and a term deposit offering ‘superDeposit’, which would also require a bank partnership.

As Inc42 reported earlier this year, Flipkart initiated the development of the fintech app in July 2023 and committed an investment of $20 million to the project. In January, the company made personal loans available on the Flipkart app, which will soon be offered via Super.Money.

This comes after the company launched UPI services for select users in March. In the first month, Flipkart recorded 5 million UPI transactions worth INR 197.24 Cr.

Flipkart’s full-fledged entry into the fintech space comes a year after its split from PhonePe and interestingly, PhonePe will be one of the biggest competitors to Flipkart, along with the likes of Paytm, CRED, Jio Financial Services (JFS) and others.

Launching is one thing, scaling it will be crucial. PhonePe has invested billions of dollars in scaling it, just like Paytm or Google Pay, Amazon Pay and others. While the market is undoubtedly large, competition makes it difficult to acquire and retain users.

Fast trade rejections

We’ve written about this before — Flipkart, after two relatively unsuccessful attempts in the past few years, is looking for its third fortune in grocery delivery and fast-paced commerce. However, reports suggest that the company considered its options before deciding to go it alone.

First, there were talks with Swiggy late last year to list on the stock exchange, as reported this week. The talks fell through after the two giants failed to agree on a valuation. Besides, Flipkart is also said to have demanded a majority stake in Swiggy, which proved to be a hurdle in the deal.

Separate talks said Flipkart was in talks with Dunzo, a Reliance-backed company that had been struggling with serious financial problems last year and had limited itself to B2B deliveries only.

Flipkart was also in talks with Zepto, which is currently in the spotlight in the quick commerce space thanks to a massive fundraising and high valuations. Those talks also fell through due to a lack of consensus on valuation.

The biggest factor behind Flipkart’s recent foray into FRE is the revenue track record. Ten-minute deliveries are no longer a gimmicky proposition like they were in 2020 and 2021. Collectively, Swiggy Instamart, Zepto, Blinkit — the three largest FRE platforms — are on track to reach combined revenues of over $1 billion in fiscal 2024, as reported earlier.

Next-day grocery delivery firm Flipkart reported a 1.6x year-on-year growth in fiscal 2024, but did not provide revenue figures for the business, which is already present in over 200 cities.

Over the past two years, Flipkart has seen its fast-trading platforms show tremendous growth and, in recent months, even enter the e-commerce territory with larger warehouses and plans to deliver large-scale products and electronics that have been the marketplaces’ forte for so long.

Instead of giving up on the opportunity, Flipkart wants to build it anew. It is not alone, Reliance Retail and JioMart are also planning to expand their reach into fast trading, so here again Flipkart faces a huge revenue opportunity but stiff competition with a foothold in a segment that will be new for Flipkart.

In pursuit of profit

For Flipkart, these two new verticals come at a critical time. Some might call it a defining moment for the company, which seems odd considering it has been around for almost two decades. But Flipkart can’t afford to wait too long.

Earlier this month, Flipkart’s majority owner Walmart said the company (along with PhonePe) was moving towards profitability. Interestingly, Flipkart has roped in Google as a minority investor in a funding round led by the US retail giant.

In a statement, Flipkart said, “Google’s proposed investment and cloud collaboration will help Flipkart expand its operations and accelerate its digital infrastructure modernization to serve customers across the country.”

This indicates that Flipkart is looking to scale up its various digital commerce verticals across categories. It needs to do a lot to get back into the black after years of losses.

Flipkart’s B2C business saw its revenue grow by 42% year-on-year to Rs 14,845.8 Cr in FY23, while its loss declined by 9% to Rs 4,026.5 Cr. On the other hand, the company’s B2B division recorded a standalone net loss of Rs 4,845.7 cr in FY23. INR.

The company underwent a reorganization last year and also laid off employees to cut costs. But Flipkart’s new play in fintech and fast-paced commerce will be crucial to turning the ship around and steering it toward profits.

Neither fintech services nor high-speed trading are saturated by any means – there are opportunities to disrupt incumbents and gain a foothold. But execution will be key, and both of these segments require urgent focus and operational efficiency.

Flipkart has been watching the evolution of Indian e-commerce and digital commerce for the past few years and is now ready to step in from the sidelines. Will the e-commerce giant find new wings 17 years after its launch?

Sunday recap: tech stocks, startup financing and more

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• Bhavish Aggarwal-led Ola all set to launch grocery delivery through ONDC app after successful food delivery pilot