Flipkart to generate 10% revenue from private labels by March 2018

Flipkart has been experimenting with varied strategies to maintain its leadership position and improve unit economics. Hoping big from its private label bets, the e-commerce major is expecting to have 10 per cent of its overall revenue by the end of current fiscal.

Currently, with three private label brands - Divastri, Smartbuy and Metronaut across 36 categories, the company plans to expand its reach to 85 categories by March next year.

Over the past one month, the company had launched two separate private label brands focusing on women (Divastri) and men (Metronaut). Through Smartbuy, Flipkart covers range of categories such as electronic accessories, home decor, small home appliances and audio amongst others.

“The private labels would contribute 10 per cent of units e-tailed on our platform and contribute as much to our revenues,” said Adarsh Menon, VP and head - Private Labels, Flipkart to ET.

Private labels are considered an important ingredient for e-commerce companies to improve unit economics as they offer better margin in a business where margins are wafer thin. Flipkart-owned Myntra has 14 in-house brands including its largest selling Rs 300 crore brand Roadster.

Flipkart is up against its arch rival, Amazon already has launched its private labels - Symbol for men’s Western formals, and Myx for women’s Indian wear last year.

Unbranded fashion is one of the largest contributors for online retailers and will remain the largest chunk in future too. Indian online market for fashion is estimated to be worth $12-14 billion by 2020 from the current $4 billion, according to a study by Boston Consulting Group (BCG) and Facebook.

Meanwhile, private labels are not a new thing in Indian e-commerce space. Flipkart introduced DigiFlip, which used to sell digital accessories such as laptop bags and camera pouches in 2012. However, the company shut down the brand last year.

So far, Myntra has performed well in private labels. At present, it has 14 in-house private label brands including HRX, Moda Rapido, All About You among others. HRX by Hrithik Roshan is already a Rs 120 crore brand while Moda Rapido and All About You said to have crossed Rs 50 crore annual revenue each.