Let me ask you this — What is the most important asset for an Indian online retail marketplaces? Well, it’s probably the third-party sellers that add a multitude of products and thus value to your fledging business. To support these sellers, India’s largest e-commerce marketplace, Flipkart had introduced the Growth Capital program last year.
Under the Growth Capital program, the company had tied up with eight leading banks and financial institutions to provide sellers across the country with convenient access to financial assistance. And today, Flipkart is elated to announce that it has successfully disbursed loans amounting to Rs. 125 crore(about $19 million) to more than 800 sellers on its platform.
For this initiative, the company offered its sellers collateral-free loans with interest rates starting at 11.40 per cent. This gave sellers a chance to gain monetary benefits(loans) with minimum documentation within shortest turnaround time. It received an overwhelming response with over 3,000 applications in the initial months of the launch, reports Flipkart. Few categories that witnessed the highest adoption rate for the program are mobile, electronics, fashion and accessories.
Shedding some more light on the recent numbers, Flipkart says that it has furbished over 800 loans out of which 80 per cent loans were availed through the collateral fee format. Also, 95 per cent of the total loans disbursed by the company are overdraft working capital loans that provide ideal repayment flexibility to sellers.
North Indian sellers welcomed the program with open arms, submitting over 60 per cent of the total applications. Metro cities, including Mumbai, Bangalore, Jaipur were seen as major contributors, but Delhi-NCR alone accounted for 35 per cent of the applications. A major chunk of applications were also received from Tier-II cities including Meerut, Tirupur, Erode and Salem providing support to smaller centers of the platform.
Talking about the successful one-year run of this initiative, Anil Goteti, Head- Marketplace, Flipkart, said,
Availability of finance is one of the major barriers for the growth of small businesses in both online and offline space. Flipkart’s Growth Capital Program addresses that issue and facilitates our sellers by helping them connect with trusted lenders in the industry.
Considering the success of the program and increasing demand for the initiative, we are estimating this to hit the 200 crores mark by the end of this festive season. We are also planning to launch promotional offers with our lenders for the festive season in the following two months. This will definitely enable our sellers to grow their business and provide quality products to millions of customers shopping on the platform.
Tough times, Tough measures
Though Flipkart has been faced with an existential crisis since the arrival of Amazon three years ago, it hasn’t forgotten the ease of its sellers and customers alike. The e-commerce behemoth has been caught in a high-tide of valuation markdowns, top-tier management changes, slowdown in growth and the scarcity of funds. However, it is now gaining some momentum as it has restructured its business and its valuation has now been marked up by some investment firms.
In search of better cashflows and profitability, Flipkart might have come down a bit hard on its sellers but it has also launched various other initiatives for their benefit. The company has recently also launched SBI’s e-commerce SME loan product which is targeted at smaller sellers who are relatively new to credit. They can avail this benefit by only submitting a copy of their KYC documents. A total of fifty loans have been sanctioned till date.
In a move to stop the sale of ‘fake/non-genuine’ products and better the overall consumer experience on its website, Flipkart has recently debuted ‘Flipkart Assured’ quality badge for certain range of its products. Majority of the most popular categories including Fashion, Mobiles, Electronics, Home and Appliances will carry the ‘Flipkart Assured’ badge.