Ecommerce giant Flipkart is looking to sell goods worth $500 million, or Rs 3,250 crore, during the five-day 'Big Billion Days' sale, sources privy to the e-tailer's plans told media. This comes at a time when the Bangalore-based e-commerce major has seen its gross merchandise value, or GMV, climb up to Rs 2,600 crore for September after having experienced a tepid growth so far this year, sources said. GMV is the value of goods sold on an online platform without factoring in discounts and returns, which e-commerce firms do not disclose publicly.
As per media reports over the past six months, barring the September spike, Flipkart clocked around Rs 2,000 crore in monthly GMV (excluding Myntra's sales). Its rivals Amazon, which is seen to be doubling down on the local market, Snapdeal and Alibaba-backed Paytm are also gunning for big business during the festive season, a crucial period for these heavily funded players to shore up numbers in an overall sluggish year for e-commerce sales growth.
Web retailers typically make an average of 10-15% as commission from the overall sales depending on each category. GMV is an important metric to determine the growth of the fledgling Indian online retailers, which have been riding on billions of dollars of investor money without any clear sight of profitability. An emailed query sent by TOI to Mukesh Bansal head of commerce, Flipkart & chairman, Myntra seeking to validate the GMV numbers did not elicit a response. However, Bansal said in a prepared statement that with 75% of Flipkart's traffic coming via mobile, the company expects the app-only sale to be a seamless experience for its customers this year.
Having racked up $3 billion in funds from several investors, Flipkart is now valued at $15 billion. However, this year has not been one of frenetic growth for the company which started off as an online bookstore in 2007. Both Snapdeal and Flipkart raised multiple financing rounds in 2014 but only managed to raise funds once this year.
These e-commerce players have been beset with excessive cash burn in the range of $20-30 million per month, which has led to the need for constant capital infusion from investors. "Flipkart has been moving away from its inventory-led model to a pure marketplace over the past year, which is one reason for its sluggish growth as it lost a lot of sales due to this big change. They've also stopped a lot of offers on their website focusing only on the app.
Overall, it's been a year of transition at the company with a string of senior-level hires and the departure of some of its early employees. What needs to be seen is how they'll sustain last month's spike in GMV, going into the festive season, as exclusive tie-ups, like the one with Motorola, which were money-spinners for the e-tailer, are now available on Snapdeal and Amazon as well," a person familiar with Flipkart's numbers said on condition of anonymity. Most analysts pointed out that Diwali sales would be key for the market to determine which one among Flipkart, Amazon and Snapdeal is likely to take the pole position. "It's a very important period for e-tailers and a lot would depend on how Indian consumers behave this year after the not-so-great experience they had last year," said Harish H V, partner at Grant Thornton. Last year, Flipkart scooped up $100 million in sales during its daylong Big Billion Day sale, which was fraught with technical snags and left consumers extremely disgruntled. This year's sale from October 13-17 will be app-only and will see Myntra's participation as well. Flipkart claims it's much better equipped this year and can handle the traffic, which would be spread across five days.