Flipkart introduces marketplace concept

Flipkart has introduced an online marketplace with products

across 12 categories in a bid to take on competing websites like eBay and Snapdeal. The marketplace model brings buyers and sellers in direct contact. As in an inventory-based model, a marketplace platform does away with the need for warehousing or having an inventory of products and the fulfilment and shipping costs. Flipkart Online Services had registered two new companies — Flipkart Marketplace and Flipkart Payment Gateway Services hinting at this initiative then.

The marketplace model is said to be FDI friendly and platforms don’t have to invest huge amounts per transaction like an inventory-led model. Snapdeal, say experts has been able to utilise the model well. It entered the product space in 2011 and now claims to have 10,000 sellers, which it expects to grow to 30,000 by the end of this year, with product sales of about Rs 2,000 crores.

The other advantage of a marketplace is the explosion of category that the model allows. LimeRoad.com, a Matrix Partners investee company, has also taken the marketplace route. But not many platform owners agree to the advantage though. In marketplace model, critics say the processes and IT enablement of vendors and retailers are not fully geared up to handle the business efficiently. However, internationally, marketplace has been a successful model. Whether it is China’s Tmall, Gmarket of South Korea, which was acquired by eBay, or even Amazon, all support the marketplace model.