Ever heard of Online shopping? Of course, you have. That’s exactly what everybody does these days. It makes buying things so much easier, no?
From clothing apparel to electronics and home appliances, from books to groceries and whatnot. Everything is now just one click away from you and it delivered right at your doorstep.
Talking about online shopping, does Flipkart ring a bell?
I’m sure it does. Flipkart is one of the most popular online websites to buy things from. It makes buying and selling, easier, quicker, and efficient. It offers multiple discounts on different occasions to provide the best facilities to its customers.
But, do you know how does Flipkart earns for itself? How does it act just as an intermediary and make millions out of it? Doesn’t it interest you to know the strategy behind it? I think it does. So, Let’s dive into the revenue model of Flipkart. But before doing so, let’s learn a few facts about it.
FACTS ABOUT FLIPKART
- Flipkart is an e-commerce website launched in 2007. It is owned by Walmart, which is reportedly buying 75% of Flipkart’s shares.
- Flipkart generated a revenue of almost $7 billion in the year 2019, which is a progress from the previous year where it earned almost $5 billion.
- The products available on Flipkart can be spread into almost 80 categories and the total number of products available on the website would be around 150 million. From this very statistic, you might have gotten a slight idea into the revenue model of Flipkart.
- There are more than 1 Lac sellers on Flipkart and more than 7 billion shipments every month. Do you realize how much would Flipkart be earning just being an intermediary between a seller and a customer?
- There are more than 50 million Flipkart app download which makes up to almost 50% of the audience to be coming from mobile phones or tablets.
With so much insight into the statistics and facts about Flipkart, you must have gotten an idea so as to how popular Flipkart might be. And with almost each of the numbers so high, the revenue generated by Flipkart is also supposed to be very high. But, how? Let’s talk a bit about the revenue model of Flipkart.
REVENUE MODEL OF FLIPKART
You might have come across a lot of ads while surfing through the Flipkart app and website. These ads are paid advertisements provided by different companies or sellers to be displayed at the home page of Flipkart, before or after the payment gateway, or somewhere at the corner while searching for different products. These are mostly promotional ads for the products sold by such advertisers. These advertisers thus, pay Flipkart to display these ads for a certain period of time. This method of affiliation is a good way of income comprised in the revenue model of Flipkart.
2. Application and Website usage:
You must have noticed above in the facts that there are almost 50 million app downloads of Flipkart. There might be fewer or even more users on the websites as well. Hence, Flipkart monetizes well from the number of downloads, number of visits, number of ads clicked, etc. through the terms of internet usage.
For you it might seem a smaller number as an individual but, as a whole lot of the customers, there are almost 10 million monthly visits on the webpage. And, almost every 1 in 5 visitors make a purchase too. This somewhat plays a good role in the revenue model of flipkart.
3. Intermediary commission:
This is basically the main part of the revenue model of Flipkart. Flipkart initially started as an intermediary between sellers and customers. It allows different sellers such as companies, shops, etc. to sell their products through Flipkart. On the other hand, it allows the customers to find all their necessities at one place.
The commission charged by Flipkart is varied depending upon the type of product and its sales. Ideally, it charges a 5-20% commission excluding taxes and/or discount.
Flipkart a number of subsidiaries from where it earns money. This is a great addition to the revenue model of Flipkart. This in the laymen’s language, is called expanding the business. These weren’t launched by Flipkart but brought by it during its journey.
Some of the famous subsidiaries of Flipkart are Myntra and Jabong (both of which are online clothing marketplaces), PhonePe(which is a UPI Payments App ). The others include Upstream Commerce, DSYN Technologies, AdIQuity Technologies, Ugenie, Jeeves Consumer Services Pvt Ltd, Mallers, Inc. Flipkart currently acts as the parent company to all these companies.
5. Social media:
Flipkart somehow is quite active on social media. With almost 2 million followers on Instagram and 3 million followers on Twitter, Flipkart engages well with its audience.
Flipkart collaborates with a few advertisers, companies, brands, etc., and gets paid for their promotion through its tweets, posts, or stories. This doesn’t happen any often but yes, it certainly is included in the revenue model of Flipkart.
6. Convenience Charges:
Flipkart charges a certain amount of delivery fee from the customers differing according to their locations. It sometimes might even charge higher for immediate delivery services.
7. Grocery services:
Apart from electronics, books, etc. Flipkart has recently launched a new category into its services for groceries. This service allows delivery of day-to-day groceries from vendors, retail stores, supermarkets, etc. who wish to partner with Flipkart. Again, Flipkart here earns through its commissions from these sellers.
8. E-kart Services:
Flipkart does act as an intermediary but it also provides pick up and delivery services for both the sellers and customers. It does not only charge the customers a convenience fee but also, charges the sellers for the services of delivering their products safely and smoothly.
By now, you would have gotten an idea into different strategies included in the revenue model of Flipkart. It works on a B2C(Business to consumer) model basis and acts as an intermediary.