What everyone missed in Flipkart’s big announcement

Photo credit: London Scout.

India’s largest ecommerce startup Flipkart said yesterday it now gives shoppers the choice to pay up in monthly instalments without charging them added interests – an effort to more lure shoppers into buying high-ticket products like televisions and home appliances.

“Currently this option is available for certain products and brands in categories like mobiles, TV, and other consumer durables. We intend to expand this service to laptops, cameras, fashion accessories, high-end watches, sports equipment,” a spokesperson told Tech in Asia.

Customers can buy electronic products costing more than US$74 and pay in equal monthly installments over three, six or nine months.

This is the first in a series of finance offerings Flipkart will launch this year.

Ecommerce companies in India are locked in the fiercest of business battles, each trying to generate more customer stickiness than the other. A financing scheme of this sort helps both ways – it lets people splurge without worrying about immediate budget restraints and it lets companies sell pricey items without having to knock down prices altogether.

But the more important message Flipkart is sending isn’t contained in this one scheme – it’s in what the move represents.

“This is the first in a series of consumer finance offerings that Flipkart intends to launch over the course of the year. Together with existing programs like product exchange and assured buy-back, Flipkart is gearing to be the most affordable shopping destination for Indian consumers,” the company said in a statement.

Flipkart’s plan allows for zero upfront payment and zero interests, potentially opening up its merchandise to a whole new set of customers – students who covet pricey iPhones but cannot afford them, or young individuals trying to set up their first homes, for example.

Flipkart cofounders Sachin Bansal and Binny Bansal. Photo credit: LetsIntern.

If the company is able to crack how to balance affordability while doing away with mad discounting, its rivals will have serious cause for worry.

A Flipkart spokesperson did not respond to an email seeking comments on what its future plans could be.

Missing the beat

While Flipkart’s financing schemes sound innovative and comprehensive, there is, however, one problem.

Fast and slow