Flipkart is putting the finishing touches on a brand of tablet computers that is likely to be available soon on its portal. To be launched under its DigiFlip range, the tablets are expected to boost margins in the highly competitive electronics retailing space.
"They will launch the tablet very soon," said a
person involved in the process who did not wish to be identified. Flipkart has,
so far, sold a range of electronic and computer accessories like headphones,
speakers and pen drives under the DigiFlip range launched in 2012.
These products are mostly sourced from original equipment
manufacturers in locations like China, Hong Kong, Taiwan, Korea and India. The
tablet is also expected to be manufactured by these overseas vendors.
Experts are of the view that selling tablets — a product
category where there is "cut throat competition" — will be very
different from retailing headphones and speakers, according to TOI. "There is a glut in the
market and the technology changes rapidly," said Arvind Singhal, chairman
of retail advisory firm Technopak.
Apple and Samsung are the leaders globally for tablets.
Apple's iPad Air retails at about Rs 35,900 while Samsung's Galaxy Tab 3
retails at over Rs 26,000 on Flipkart. Home grown mobile device brand Micromax
prices its tablets at a much more affordable range, with models starting from
Rs 4,999 and going up to Rs 13,999.
"If they (Flipkart) limit the number of models, provide
great specs that set them apart and price it right, it will work," said
Pinakiranjan Mishra, partner and national leader (retail and consumer products)
at consulting services firm EY. "They must also provide robust after-sales
services onsite," he said.
Retailers typically launch in-house brands to fill gaps in
categories or to improve margins. Sale of electronics account for 30% of the
$2.3 billion (Rs 13,700 crore) Indian online retail market, making it the
largest category for e-tailers.
However, the low margins — under 10% — that branded
electronics provide has been a cause for concern. According to industry
estimates, margins of private label electronic products could be about 20%
higher than branded products in the same category.
There are also global precedents, especially Amazon's
Kindle. A report by Morgan Stanley Research last year estimated that the
e-commerce major would sell Kindle e-readers worth $4.5 billion (Rs 26,900
crore) in 2013. However, it is the digital content that the Kindle powers that
makes the device valuable to Amazon.
The report states that Amazon will earn $3.8 billion (Rs
22,700 crore) in digital media revenue in 2013 and estimates that the Kindle
ecosystem would contribute 11% to the company's total revenue and 23% to its
operating profit. The Seattle-based company is widely expected to launch a
range of smartphones later this week.
Flipkart, which disclosed transactions of $1 billion (Rs
5,968 crore) last fiscal, has launched a private label fashion range, Flippd.
Private label apparel is estimated to provide margins of up to 60%, according
to industry estimates. Its acquisition of fashion portal Myntra last month is
expected to expand its in-house brand range.
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