Ecommerce player Flipkart, that downed shutters of its music service Flyte earlier this month, has discontinued sales of consumer durables such as television sets, refrigerators, air conditioners and washing machines since the past one month.

The move has raised questions on the business model of the country’s largest e-tailer, especially with Amazon entering the Indian e-commerce space.

Bangalore-based Flipkart, which once had over 1,000 branded consumer durables and white goods across international and regional brands such as Samsung, Panasonic, Whirlpool and LG among others, has taken to selling small electronic goods at present.

Confirming the move, a Flipkart spokesperson said, “We keep various factors in mind while arriving at our service matrix. This could be our shipping partners in a state, our delivery capabilities or order volumes. These are purely business decisions that arise from time to time in an organisation that is scaling as rapidly as ours. These change from time to time depending on circumstances and are not necessarily permanent.”

Industry challenges

Queried on the timing of the discontinuation, Ankur Bisen, Vice-President, Technopak Advisory services, was unwilling to comment on a specific company. He said most e-tailers selling bulky white goods were facing challenges, in terms of logistics and inventory.

“There is a high cost of shipping involved in large cargo items. This cost has to be borne by the company. Sometimes there are other issues such as breakage during delivery. There are demand issues too, as the frequency of buying goods such as TVs and washing machines is not that high,” he said.

According to a recent Google survey on Online shopping trends 2013, apparels and accessories were pegged as the most rapidly expanding categories and have overtaken electronic items, including white goods.

The report further adds that the share of electronic items decreased to 34 per cent in 2012 from 39 per cent in 2011.

Incidentally, Flipkart entered the apparel segment this year. Analysts have termed the apparel business a high margin and high volume one.

Nimit Grover, Head-Marketing of online marketplace, that also sells white goods, said that the share of white goods is less than 10 per cent and does not feature in the top five categories of goods sold online.

Distribution network

Grover added that while people tend to buy online for better deals and easy availability, the issue with white goods is that most offline players score given their strong distribution network.

The same holds true in small towns, where the deals could be more lucrative, he said.

“Apart from the logistic issues, we are facing difficulty in passing on the margin benefits to customers, as the shipping charges of bulky items are 10 times higher compared to other categories,” Grover said.

(This article was published on June 11, 2013)
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