Daybreak - Flipkart wants to do with electronics what Blinkit and Swiggy did with groceries

Episode Date: December 4, 2024

It has been about four months since Minutes, Flipkart's all new quick-commerce service was launched in Bangalore. But Flipkart isn’t doing e-commerce the old fashioned way. It’s not taking on the likes of Blinkit or Swiggy Instamart directly by promising speedy grocery deliveries. Instead, its big focus is electronics. It is a space that quick-commerce giants like Blinkit, Swiggy and Zepto – have all dipped their toes in. But Flipkart wants to take things to the next level. Like one Flipkart manager told The Ken, the company is trying to increase the width rather than the depth of the electronics category. The idea is to give more options to customers, but in limited quantities. But while it may not be taking on Blinkit and Swiggy Instamart directly, Flipkart does have another major challenger – Croma, India’s second-largest electronics retailer. And courtesy a partnership with Big Basket, Croma is also getting into the quick commerce business. However, building the capability to deliver large electronics, that too in volume, is not an easy task. So how do they plan to do it? Tune.Listen to the latest episode of Two by Two hereDaybreak is now on WhatsApp at [phone]. Text us and tell us what you thought of the episode!Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.Listen to the latest episode of Two by Two here

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. 792-458 to 18. You're probably thinking, is she okay? Because chances are that these numbers mean nothing to you. But for an employee working in Flipkart's new quick commerce arm called Flipcott Minutes, they mean everything. We'll get into why Flipkart decided to enter the oversaturated quick commerce space in just a bit.

But before that, let me explain what these numbers mean. These were the numbers flashing on the screens of many Flipcott managers in the Minutes team late last month. They represented the very ambitious targets that they had to meet across three cities where Minutes is currently available, Mumbai, Delhi and Bangladesh. Now, let me break it down for you. The first number, 792, indicates how many large appliances should be currently in stock. The second number, 458 or 458, is their sales target.

It represents the number of units that have to be sold by that hour. And the third number, 218 or 218, or 218, is the actual number of orders fulfilled, less than half of the actual target. You see, it's been about four months since this new service was launched in Bangalore and ever since, Flipcott is going all out with this latest quick commerce push. The targets the e-commerce giant has set out for its managers are just as ambitious as the project itself. Flipcott isn't doing e-commerce the old-fashioned way. It's not directly taking on the likes of Blinket or Swiggy Instamort by promising speedy grocery deliveries. Its big focus is electronics.

And this is something that all the top dogs in the space, blankets, Swiggy and Zepto have dipped their toes in. In the last year or so, we've seen a lot more electronics available on all of these apps. Here on Daybreak also, we've spoken extensively about how all these apps have been able to deliver ACs, coolers and smartphones within minutes. Now, Flipkarts wants to take things to the next level. Like one Flipkart manager told the Ken reporter Noha Bubre, the company is is trying to increase the width rather than the depth of the electronics category. The idea is to give more options to customers but in limited quantities.

But while it may not be taking on Blinket and Swiggy Instamart directly, Flipcard does have another major challenger. I'm talking about Chroma, India's second largest electronics retailer. Now, courtesy of partnership with Big Basket, Croma is also getting into the quick commerce business. But building the capacity to deliver large electronics, that too in volume, is not an easy task by any stretch of the imagination. So how do they plan to do it?

Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nickdaa Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague Rahal Philippos and I will come to you with one business story that is worth understanding and what your time. Today is Thursday the 5th of December. I need to walk you through the whole journey of purchasing and receiving an expensive electronic device on FlipCart Minutes. Let's say you decided to buy a desktop computer one day. So you go to the Minutes tab on FlipCard and you place your order. Now let's assume that you're

ordering the product in Bangalore. A manager at Flipcard explained to Noha how it would work. If you were placing the order the old-fashioned way, it would be shipped. to you latest by the next day. Very often it does end up taking about three to four days to reach your doorstep. But now, Flipcard and Big Basket want to cut down this delivery timeline to about 30 to 60 minutes only. They're banking on consumer data that they have managed to collect over the years and with that data, they are building a whole separate channel to handle the delivery of large appliances. At the very core of that new channel are dark stores. Minnitz's dog stores, which are located in Mumbai, Delhi and Bangalore

are slightly larger than the dog stores operated by Blinkett, Zepto and Swiggy Instamot. They're around 4,000 to 5,000 square feet in size, and the reason for that I'm sure is quite obvious to you now. Large appliances, unlike groceries, require a lot of room. So to deliver faster and at scale, these companies need space. A lot of space. Bigbasket has not yet clarified whether it, has started setting up larger dark stores. Most of its existing dark stores are about 3,000 to 4,000 square feet in size.

Some are about double that to store more stockkeeping units or SKUs. For both companies, the focus will be on enabling a faster and more agile supply chain from the sourcing hub, which will house a huge assortment of electronic products to the dark store from where the order will be eventually shipped to you. So let's go back to that desktop computer you placed an order for a little while ago. Once you place your order and if it is in stock at your nearest dock store, it'll be delivered to your doorstep within the promise 30 minutes. The idea is for the stock at these dog stores to be replenished from the sourcing hub at least twice a day.

That way the dog store network will always be ready to deliver. But with electronics, particularly large appliances, there is an extra-lour. layer of complication, which is installation. More on that in the next segment. Troma executive told Noha that generally all electrical appliances fall into two buckets, the kind that require installation and the kind that do not. While from a consumer's perspective, it may not make much of a difference, it really matters for the company responsible for the delivery. And that is because the warehouses for these products are different. And so are the people who handle the assortment. Now, the reason that the electronics category has really exploded on the

older quick commerce platforms like Blinkets, Swiggy, Instamort and Zepto is because of electronics that do not require installation. I'm talking about devices like kettles, power banks and air purifiers. Earlier, you needed to place an order on Flipkart or Amazon for these products and then you would have to wait a couple of days to get them. But QuickCommerce changed that. That's also a big reason why Flipkart entered this space. It cannot let its competition take over electronics. This is, after all, its largest merchandise value driver. The electronics segment accounts for nearly 40% of Flipkart's total merchandise value. So, it launched minutes. The strategy is simple. Flipkart wants to leverage the selection and relationships that it has built with brands on the e-commerce platform

and replicate them in the quick commerce space. There is no one as involved as its own chief executive, Kalian Krishmurti. He sits in on all the team discussions, meets all the larger consumer goods and electronics brands on the platform. He has also set an ambitious merchandise value target of 700 crore rupees for minutes to be achieved by March 2025. Their goal is to bring bigger brands on the platform. In fact, just late last month,

Muti met the Korean electronics major Samsung's South Asia head to discuss mobile phones, television sets and refrigerators. But once large appliances enter the picture, it's important for companies to take care of post-sales service. Chroma provides same-day installation services in some cases depending on the volume. It either does that by itself or takes the help of a third-party vendor. Flipkart, meanwhile, is trying to integrate Jeeves, a tech-enabled after-sales service form that it acquired in 2014 as a service on minutes. One manager working on the service told NUHA that they will be using shadow facts for installation and delivery. But the trickier part is when you add exchanges and returns to this mix. Flipkot and Chroma both entertain return and

replacement for electronic items and also provide an exchange option for products like mobile phones, TV sets and ACs while buying a new one. Flipcott Minutes plans to add an exchange option from this month onwards. The other important factor to consider is pricing. Because for someone looking to buy a larger appliance, a platform that has competitive pricing along with an EMI facility will always stand out. Stay tuned. I'm sure you've heard about Amazon's Great Indian Festival. The 30-day annual shopping event generally takes place around Diwali.

Turns out, this year, a significant portion of the demand for electronic appliances and smartphones came from Tier 2 and Tier 3 cities. There were two reasons for this. The first one is, obviously, great discounts. The second is easier to access credit. The e-commerce giants saw over 40% growth

in no EMI transactions this year for products like mobile phones, washing machines, TVs, refrigerators and ACs. This phenomenon is not exclusive to Amazon. A recent study showed that over 50% of people in India prefer using an EMI card or any credit card to shop, which is why quick commerce apps like Minutes, Big Basket and Blinket are all providing EMI options to their customers. Like one Blinket manager put it, the aim is to be an app where you can get absolutely everything from a literal Apple to Apple products. And the more expensive the product,

the more important EMI options become. Today, a lot of quick commerce platforms are missing out on best-selling electronic models precisely because they do not have credit financing options like traditional players, the likes of Amazon and Flipcott. A minutes manager told Moja that until quick commerce platforms solve for affordability and payment options, it will be very difficult to make a dent in Amazon and Flipkarts businesses beyond a certain point. Minutes and Big Basket are very quickly becoming the middle ground between traditional e-commerce and quick commerce. For now, they have to crack the 15 to 30-minute electronics delivery game. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform.

What you're listening to is just a small sample of our sales. subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. To subscribe, head to the ken.com and click on the red subscribe button on top of the Ken website.

Today's episode was hosted by Snigda Sharma and edited by Rajiv C.N.