While the e-commerce ecosystem in India continues to show rapid growth, Flipkart is planning to retain its top spot in the country by cutting down on its burn rate, reports ETtech. Over the next year, the e-commerce giant plans to save somewhere between $150 to $200 million to aggressively push forward and double its growth rate.
Flipkart is now looking to focus its attention towards the growth of the platform by employing the fund saved from this cost-cutting back into the business, mention sources privy to the development. With regard to the same, the company plans to generate surplus cash through operational efficiencies and revenue from its ad and logistic units.
The current burn rate of the company stands at $40-$50 million per month but it is said to dropping by an average of 7 percent every quarter. But, Flipkart is now looking to aggressively reduce the capital spent and accelerate the pace of slashing the cash burn to achieve its goals by December 2017. Previously, the unicorns of Indian startup space have been able to gain investments based on their impressive negative cash flows. But the market has now matured and investors are now looking for overall sustainable growth to fund a startup.
Flipkart now plans to infuse a bare minimum of fresh capital into its efforts of scalability until a new investor comes on board to support its expansion into new avenues. This step towards cutting costs and beefing up it’s logistic and marketing division with bare minimum investments will enable Flipkart to present itself as an attractive package to new investors.
The company could soon gain WalMart, one of the largest retailers as its primary investor. The interwebs have been active with the speculations of WalMart making as much as a billion dollar investment in Flipkart for a 5-7 percent stake. The two e-commerce behemoths will then together rival their common enemy Amazon, who’s established a prominent presence in the country over the past three years.
But during the past month, Flipkart while spending much less on advertising and marketing has been able to trump its arch-rival Amazon in the sales figures. The company managed to sell products worth Rs. 5,000 crore as compared to around Rs. 4,500 sold by Amazon, which saw the infusion of an additional $3 billion earlier this year. Flipkart, on the other hand, has suffered from the scarcity of funds, multiple valuation markdowns, and top-tier official exits.