Flipkart’s profitability drivepressurises top fashion brands
08 July 2024, Mumbai
Flipkart India’s intensified efforts to achieve profitability, particularly in its fashion and lifestyle segmentshave increased the pressure on major brand partners. Since January, Flipkart's B2B arm has directed its category managers to extract higher business volumes from brand partnerships, marking a significant escalation from initiatives that began during last October's Big Billion Days sale.
Through these efforts, Flipkart aims to achieve EBITDA positivity within six to eight months. However, this goal necessitates a stronger performance from its fashion category, according to insights from a former Flipkart executive.
Among the brands feeling the impact of Flipkart's strategy is Spykar Lifestyle, a longstanding denim-wear partner that generated Rs 200 crore (approximately $24 million) in annual sales on the platform in 2023. ShrikantTripathi, E-commerce Manager, Spykar, notes, Flipkart approached them in December 2023 for margin increases, a proposal they declined.
Flipkart's negotiation tactics extend to prominent brands such as Nike, Adidas, Puma, Woodland, Casio, and Aditya Birla Fashion Retail (ABFRL), all of whom are reportedly facing similar demands for enhanced revenue contributions. Sources familiar with the matter, including former executives from Nike and other brands, likened Flipkart's approach to annual rent negotiations, where the platform seeks increases while brands aim for stability or reductions.
This aggressive stance by Flipkart aligns with its broader goal of achieving profitability ahead of a potential IPO, underscoring its strategic shift towards tighter financial performance in preparation for public listing.
