June16, 2014: Online retail major in India, Flipkart after launching a private label fashion range Flippd according to reports circulating in different media is planning to launch a brand of tablet computer under its range of private label electronics DigiFlip. This move is being seen as a step to increase margins as the margin is high in selling private labels. According to estimates, margin for private labels generally are upto 60%. Flipkart has been selling its own range of electronic and computer accessories under the DigiFlip range since when this range started selling from 2012.
Flipkart has been sourcing these products from original equipment manufacturers (OEM) based in locations like China, Korea, India, Taiwan and Hong Kong. It is being speculated that Flipkart would be importing this private label tablet from any of these locations. Flipkart recently has been going very aggressive in the overcrowded online retail space and recently acquired the fashion portal Myntra last month. This deal is also said to help Flipkart in expanding its house brand range. The online retailing market has been suffering from low margins and higher distribution costs and players like Flipkart have begun changing their business model for a sustainable growth.
There is a divided opinion in the market about the launch of private label tablet by Flipkart. Some experts believe that if they limit the number of models and are able to give more value for money to the customers by providing good specifications then this move might work. Flipkart needs to provide good onsite after sales services as well. There are other experts who believe that bringing out a tablet which is heavily dominated by global players like Apple and Samsung and home grown domestic brands like Micromax, Karbonn, Lava, iBall etc. could be challenging.
Flipkart would be looking forward to make a mark in the USD 2.3 billion Indian electronics online retail market with its own tablet when most of the e-tailers are struggling with low margins in branded electronics. Margins in branded electronics is said to be around 10% where as for private label electronics product it could be as high as 20%. Sales of electronic goods account for 30% of the Indian online retail market which makes it the largest category for e-tailers.
