Online retailer Flipkart is launching a marketplace for third party sellers by March, according to sources. At least three people familiar with the development told NextBigWhat that the company has started contacting retailers aggressively about their marketplace launch.
The launch is expected to be in the second half of next month, said one source who added that the online retailer is charging a fee of 6-10% fee to sell products on their platform as against the 12-15% industry average.
In the marketplace model, third party sellers can list their products on Flipkart’s website and sell directly to the consumer. The model has been gaining popularity in India as small offline retailers look to tap into a growing number of Internet users in India. The model also reduces the risk of keeping inventory for e-commerce companies.
As of now Flipkart has not finalised on an actual percentage to be charged on sales, said a retailer who did not want to be identified.
Over the past few months, media fraternity has been abuzz with the rumors of an imminent marketplace launch by Flipkart, which raised over $300 million from the likes of Tiger Global and Nasper.
One of the sources mentioned above said that Flipkart is not signing up exclusive deals with sellers. Essentially, this means that each category will have multiple sellers and each seller is free to sell on other marketplaces such as eBay and Snapdeal.
Recently, it was reported that the US based eBay, which has been running an online marketplace in India since 2005 is likely to pick up a stake in Snapdeal- the Delhi based online retailer which started out as daily deal site and pivoted to become a marketplace.
In September, Venus Kalra, one of the members of the NextBigCommunity had revealed Flipkart’s intention to launch payment gateway and marketplace on the lines of Amazon and eBay.
Flipkart, which raised more than $300 million of venture capital money in 4 rounds, and has gained government approval to set up two new companies in India named Flipkart Marketplace Pvt Ltd and Flipkart Payment Gateway Services Pvt Ltd in August and September 2012 respectively.
Looking at the range of selling fee (6-10%) indicates Flipkart’s aggressive go to the market strategy as cost of service (including shipping) could be much higher than given 6-10%.
Although, Flipkart has supply chain and logistics in place, its existing capabilities are probably enough to service its own needs. To run a successful marketplace model, Flipkart needs to have multiple pickup centres across the country. So, is Flipkart working on strengthening its logistics for the marketplace?
The grapevine has it that online giant Amazon and Rocket Internet backed Jabong, both are planning to launch marketplaces in India in the coming months. Jabong, a relatively late entrant into the ecommerce space in India has made good progress in the country. The company has already started offering value added services such as logistics and outsourced customer care services to merchants on the tap.
What are your thoughts?