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BW Businessworld

Amazon Is Here But Flipkart Fails To Raise Ante

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 On a day the world's largest e-tailer Amazon Inc. launched its India store amazon.in, you would expect India's biggest e-tailers to be on an overdrive to counter the latest threat to their business. However, buyers on India's biggest e-tailer flipkart.com found the company has "discontinued" the entire category of consumer electronics (TVs, audio systems) and white goods (air conditioners, refrigerators, washing machines)
 
Not too long ago, the virtual seller had listed over 200 odd televisions and refrigerators, around 150 washing machines and 700 plus home appliances from all major brands, including LG, Whirlpool, Panasonic and Kenstar. While the first three categories are amiss on the website, home appliances category has been skimmed down to 300 SKUs of small items such as hand blenders, electric iron, etc. 
 
 
In a nutshell, the company has withdrawn all bulky items from its website, including large furniture.
 
“We were not able to handle shipment of these heavy items and a lot of products were returned due to breakage while transporting,” said a Flipkart customer care executive told BW | Businessworld. According to him, the company stopped selling heavy electronics and big devices in the first week of May. The executive hadn't been informed when--if at all--the categories will be relaunched.
 
Given that Flipkart manages packaging and shipment on its own, it is surprising the company is struggling with quality of shipping and delivery. Flipkart officials did not respond to BW Businessworld's queries on the withdrawn categories. 
 
On the contrary, Gurgaon-based logistics firm Delhivery ships around 500+ consumer durables a month, including TVs, microwaves, etc. for variety of e-tailers (barring Flipkart), with as few as 5-6 returns/damages. “A lot of companies do not focus on the right packaging, do not have trained staff or a network capable of delivering such items. Hence, the damages increase and the return rates go up dramatically,” says Sahil Barua Chief Executive of Delhivery.
 
Read BW | Businessworld cover story: E-tailing Wars

Flipkart's surprising withdrawal of a major category at a time when competition is intensifying is set to raise questions about the reasons behind the withdrawal of the category. Is it just shipping problems or is their more to it? Electronics, with it low margins, has been a very difficult category for any e-tailer to operate in. Companies focused on this category (specially on the warehousing model) have always struggled; be it late Letsbuy (which was bought over by Flipkart) or buytheprice.com (which got acquired by tradus.com).

“It adds a significant cost to ship these items and if the margins are low you end up being in negative gross margins,” says Navneet Singh, CEO of Chhotu.in.