Homegrown e-commerce giant, Flipkart is all set to launch a new vertical by expanding into the territory of the online travel agency (OTA), according to sources close to the development.
Flipkart will offer bookings for flights, trains, buses, and hotels as part of this category and will launch these services through tie-ups with specific industry partners. The company is already on the hunt for a category head for this vertical.
The timeline and the broad contours of the launch and execution strategy are yet to be known as nothing a been clarified by the company as of now.
Background
News about this takeover was in the air when Rajesh Magow, co-founder and chief executive officer of India’s largest online travel agency MakeMyTrip, returned to its board after a two-year gap.
Naspers is a common investor in the two companies. The South African conglomerate is the single largest shareholder in MakeMyTrip and one of the earliest investors in Flipkart.
Launching a travel vertical would be helpful in fructifying Flipkart’s strategy to diversify into categories and drive more GMV (gross merchandise value) and consumer stickiness through repeat consumer rates and on its platforms.
Flipkart CEO Kalyan Krishnamurthy told that increasing monthly active users on the platform is the only way forward.
$2.5 billion infusions by Japanese investment giant SoftBank had invested $2.5 billion in Flipkart in January 2017 and the company has left no stone unturned to drive consumer stickiness. This includes launching private labels in various categories to releasing its own smartphone.
Flipkart had relaunched its grocery operations through its pilot Supermart, another category that has the potential to drive-up its repeat consumer rates.
What can Flipkart expect?
Industry experts feel that the move is natural, considering that Flipkart has a large consumer base.
“This is just an extension of services under the brand,”
said Jaspal Singh, a partner at Valoriser Consultants.
“Flipkart is filling the gap area and may open up the platform for other aggregators.”
He added that Flipkart’s huge consumer base could help increase the sales and revenue channel for their OTA offerings as part of a cross-selling strategy.
Paytm too had decent success in diversifying into movie and bus ticket bookings as well as the larger e-commerce business.
However, some industry experts feel that Flipkart may be venturing into uncharted territory, given that the OTA space is a mature market with well-established players. Unless Flipkart has something exceptional to offer, it does not stand much of a chance.
Other players in the market
An estimated 40% of all travel transactions take place online, with large established players such as MakeMyTrip, Cleartrip, Goibibo, Yatra and Goomo dominating the space. These portals offer both ticketings as well as accommodation services.
The hotel booking space has seen newer tech-enabled and well-funded players such as OYO, Treebo, and Fabhotels, among others. Global players such Booking.com, Agoda.com, Skyscanner, and Airbnb also have a say, as does Google Trips.
Make good use of Phonepe
Flipkart will have to incentivise customers through discounts and cash back. This would be a cash-intensive procedure for the startup.
The success of Flipkart’s plan, according to the industry experts, is contingent upon a number of factors.
It has been observed that if Flipkart launches its travel services through its in-house payments arm, Phonepe.
However, if Flipkart does roll out a one-stop app an Indian WeChat having a foundation in the travel space would be helpful.
Also Read: Reasons Every Entrepreneur Need to Start Travelling
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