Flipkart is striving to increase the service quality

According to industry observers, Flipkart is not limiting itself to services and products which it has complete control over. Instead, Flipkart First wants to be a broader ecosystem play.

“I do not think Flipkart First wants to be similar to Prime. There is some deeper thought in the second launch of Flipkart First where other ecosystem partners have come in,” says Rahul Chowdhri, a partner at Stellaris Venture Partners.

What were the discounts?

Flipkart First had floated a trial balloon earlier during its Big Billion Sale when it offered membership at these portals at various levels of discount.

The partnership with Swiggy, which is still at a very rudimentary stage, will also rely on cashbacks, but only when a Flipkart First member’s PhonePe-linked wallet is used on Swiggy. The others will follow a similar style. Enter a promo code or use PhonePe to pay for some of these services to get some money back. It is Flipkart’s aim to start building a universe of its own.

The idea is to create a super app, the insider adds, with payments and PhonePe at the center of it.

The “super app” is an idea that Flipkart has been toying with for a while, just like WeChat in China. And with Tencent—the company behind WeChat—backing Flipkart, there is a lot of knowledge readily available.

And for the ultimate aim of the super app, Flipkart has been in discussion with Swiggy to invest between $20-50 million. It has also approached other contenders such as BookMyShow. “More than money, it will give Flipkart the leverage where partners align resources to meet the requirements. Today, it is about food, ticketing, cab bookings. Going ahead, it can include financial services and healthcare,” says Chowdhri.

Looking forward

To reach the super app status, it needs to build loyalty, and that’s why the e-commerce major’s repeated attempts at subscription. And all of this depends on Flipkart’s ability to execute First. Will it succeed? Absolutely.

Flipkart has raised a lot of money now and that will help the company spend its way to the front of the queue. It may even see a faster pick up when compared to Amazon. Also, this time, it can live up to its delivery promises considering that the company has warehouses in the top 10-15 cities.

But there are a few things it will have to change. Flipkart, since its last attempt at a subscription program, has presented a definitive image to its customers: it is a place where they would get the best prices. “Right now, Flipkart is known for its deals on phones and electronics. You can’t rely just on deals to win against Amazon,” says Anirudh Damani, managing partner, Artha Venture fund.

Damani argues that discounts will not be able to buy Flipkart loyalty. But discounts will only attract deal hunters, who need to be chased repeatedly.

There’s just one way to beat that. Flipkart will have to try and be an aspirational brand again, and that depends on its content play.

“If you look at the economics of the Amazon prime program: at around Rs 1,000 per year, it is disrupting DTH providers besides providing fulfillment value. This makes the program highly sticky and potent. Flipkart needs to innovate its premium value proposition,” says Ashish Kashyap, former president of MMT and Ibibo Group.

Why does Kashyap argue that? Simple. Because these services are exclusive to Amazon Prime subscribers and, therefore, cannot be accessed independently. A customer will have to be a part of Amazon Prime to watch the movies.

That is not so with Flipkart and its partnership with Hotstar and Gaana.

And that’s where it will have a few problems. Just like Zomato Gold. Flipkart will have to rely on Hotstar and Gaana to continue the high-level of performance that customers now expect from Flipkart. Also, many of Flipkart’s customers are Hotstar users. After all, it is the only streaming service in India with sports, specifically cricket, on it.

 

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