Why Is Flipkart Entering the Indian Smartphone Battlefield?

The popular online shopping portal has launched its own range of Android smartphones in India.

Flipkart will have its hands full competing with brands like Xiaomi and Nokia among others.

(Photo: The Quint)

Flipkart is the latest, and most unlikely, name to venture into the smartphone business this month. The company has announced its Billion Capture+ range of smartphones, available from 15 November via its platform.

The phone’s hardware has been designed and manufactured by Smartron in India, and the features have been customised as per the needs of consumers, which has been derived from Flipkart’s own data research.

While Flipkart’s move comes as an interesting proposition for the industry, most analysts feel that Billion Capture+ (BC+) is nothing but Flipkart trying to extend its arms to generate extra revenue from its trusted consumer base.

Their move is similar to what Amazon had done in the United States, with the Fire range smartphones, which failed to take off. So, after seeing its biggest rival tank down with a similar strategy, why is Flipkart trying its luck, that too in a hyper-competitive market like India?

Flipkart entering into smartphone devices ecosystem is a step to generate extra revenue from its existing user base. The Indian smartphone market is one of the fastest growing markets in the world, and an attractive destination for many stakeholders

Pavel Naiya, Senior Analyst - Devices and Analytics, Counterpoint  

Does this mean Flipkart, backed by a big round of funding, feels their strategy is foolproof enough to work, and provide them with another stream of revenue?

Speaking to Smartron gives us an idea into Flipkart and Sachin Bansal’s thought process, which is seemingly skewed towards diversifying, and opening up an avenue for e-commerce portals that hasn’t been explored in India till now.

Flipkart is our first partner with whom we’re making phones for different users. We are only the hardware enabler for this range, providing them with our TronX ecosystem, but Flipkart will be the one building the brand from ground up. 

Mahesh Lingareddy, Founder and Chairman, Smartron 

Smartron is the India-based brand which had launched SRT smartphone, which was endorsed by Indian cricketing legend Sachin Tendulkar. 

New-Age Brand Tie Ups

What we’ve seen till now is a partnership between original equipment manufacturer (OEM) and software makers like Android. But with brands like Billion Capture+, you’re seeing the future of partnerships in the mobile sector, where Flipkart plays a pivotal role in the final product.

Flipkart’s existing data on online consumer buying history will help it target relevant customers for its product portfolio to its advantage. 

Pavel Naiya, Senior Analyst - Devices and Analytics, Counterpoint  

What Flipkart plans to employ with BC+ has never been put into use by other e-commerce platforms in India. But if the initial signs are positive, then expect Flipkart and its backers (and maybe its peers) going strong on this route.

When asked to comment on the degree of partnership between Smartron and Flipkart, Lingareddy simply accepted they aren’t exclusive to a single brand.

We haven’t quantified our partnership for BC+ with equal role played by Smartron and Flipkart. Our level of understanding with Sachin Bansal & Co allows us to take things slowly, but to answer your question, we are not committed only to Flipkart. 

Mahesh Lingareddy, Founder and Chairman, Smartron 

It’s quite obvious that both Smartron and Flipkart want to keep their options open, giving them the chance to partner with other names in the industry.

Need to Focus on Basics

Having said that, Flipkart will now be entrusted with not only delivering the product, but also catering to its after-sales support, which wasn’t required for them as a marketplace.

Logistics is always seen as a big hurdle in the Indian market, and if the BC+ has to succeed, they need infrastructure to be robust and mishap-free.

Smartphone supply chain management is another difficult area. Finding the right partners to source products at competitive prices is an important part of becoming successful in this race.

Pavel Naiya, Senior Analyst - Devices and Analytics, Counterpoint  

The other big challenge for Flipkart — to change its image from being an online shopping portal to a brand worth trusting with its devices. And Pavel clearly feels they have a long way to go before buyers see them as a viable avenue and option to the established mobile brands.

India is a price sensitive market and communicating value of a product is a challenging task even for an e-commerce giant like Flipkart.

Pavel Naiya, Senior Analyst - Devices and Analytics, Counterpoint  

Except for the Kindle series, Amazon faltered in its mission to create a device ecosystem. And Flipkart has some hard examples of its own to learn from.

We have mostly seen that Indian consumers only vouch for a brand that not only caters to their needs but also offers them at a value. If Flipkart manages to find the right formula, they may be onto something, which catches everyone’s attention.

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