Flipkart uses private labels to land it more control; Sellers call it a foul move

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India’s leading etailer, Flipkart is trying every avenue to make the most of its private labels. The online retail platform will be increasing its private labels and their categories by December for higher revenue. But, the plan to depend on private labels is not sitting well with sellers.

Flipkart’s private label franchise to control pricing

Online marketplace, Flipkart intends to set up a franchise network for all its private labels under its brand ‘Smart Buy’, which its online vendors can sell on the platform, stated sources with knowledge of this matter.

The etailer sent out an email to third party sellers requesting them to put their products under its private label. The etailer promised that advantages of selling as Flipkart SmartBuy will include:

  • Dedicated introductory page for Flipkart SmartBuy

  • Extensive customer reach – as branded products are more likely to get customer attention

  • Associating with Flipkart brand name helps earn trust of customer

Discussing pricing was also hinted under this programme in 2 of the steps it suggested to a backpack seller:

(Obtained from Flipkart email to sellers)

(Obtained from Flipkart email to sellers)

(Obtained from Flipkart email to sellers)

(Obtained from Flipkart email to sellers)

This has rubbed sellers the wrong way, causing them to detest this plan. They claimed that the move offers added advantages which will make private brands more powerful on ecommerce platforms.

Sellers’ take

Leading etailers are providing undue advantages to their own labels, complained an online seller association. Online retailers like Flipkart, Amazon and others have launched their own private labels in past 8-10 months. These provide the etailers with higher control over product:

  • selection
  • sourcing
  • pricing

The association also wrote to the Competition Commission of India and the Commerce Ministry about the same.

The All India Online Vendors Association (AIOVA) spokesperson mentioned that with this move Flipkart will put third party seller products on the back foot as they won’t receive any prominence on the Flipkart portal.

Flipkart confirmed its private brand franchising plan and is planning to make 10% revenue through its overall private label expansion. The ecommerce company is also looking to turn profitable and private labels are a key part of this main plan.

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