Flipkart is gearing up to lock horns with Amazon in a strategic move aimed at seizing a larger slice of India’s burgeoning e-commerce market. The Walmart-owned company introduced its own rendition of the premium subscription service – the Flipkart VIP. This development unfolds just days before the highly anticipated festive season sales, scheduled from October 8 to October 15, where both e-commerce giants are pulling out all the stops to entice customers with irresistible discounts and exclusive offerings.
The battleground is set, and Flipkart is making its presence felt. For an introductory annual fee of just ₹499, Flipkart VIP seeks to reflect the early days of Amazon Prime’s pricing strategy, undercutting the competition by a significant margin. Notably, Flipkart VIP costs just one-third of Amazon Prime’s current subscription fee, which stands at ₹1499. While pricing dynamics may evolve over time, the value proposition remains strong. Early access to sales and generous discounts are on the menu, creating a compelling offering for Indian shoppers.
One standout feature is Flipkart VIP’s promise of free same-day or next-day deliveries in select regions, aligning closely with Amazon Prime’s hallmark benefit. However, there’s still ground to cover before extending this privilege to customers nationwide. This strategic focus on expedited deliveries demonstrates Flipkart’s commitment to matching Amazon’s customer-centric approach.
Moreover, Flipkart VIP aims to redefine the customer experience by streamlining returns, with pickups scheduled within an impressive 48 hours. But the ace up Flipkart’s sleeve is the provision of dedicated customer service agents for program members – a unique offering currently absent from Amazon’s repertoire. This move signifies Flipkart’s determination to gain a competitive edge and solidify its position in the fiercely contested Indian e-commerce arena.
As Flipkart and Amazon gear up for a festive season showdown, the e-commerce landscape in India is set for an exhilarating transformation. The battle for supremacy in this high-stakes market promises to redefine the rules of engagement, ultimately benefiting consumers who will enjoy a richer, more competitive e-commerce experience.
However, Amazon, a well-established player, has gained a significant advantage with its bundled suite of Prime services. In addition to the shopping perks, Amazon Prime offers an extensive entertainment portfolio encompassing Prime Video, Music, Gaming, and Reading. This comprehensive package has made Amazon Prime not just an e-commerce loyalty program but also an entertainment powerhouse, enticing subscribers with a diverse range of content and services.
Flipkart VIP, while making strides in India’s e-commerce sector, has yet to venture into the entertainment domain. However, it’s not without its own set of unique offerings. One standout feature of Flipkart VIP is its collaboration with Cleartrip, allowing members to reschedule flights at nominal rates. This added benefit addresses a common pain point for travellers and adds a layer of convenience for program members.
Flipkart VIP: The Game Plan for Elite Shopper Base
Flipkart’s introduction of the exclusive Flipkart VIP program is a calculated strategic move, driven by a nuanced understanding of India’s diverse e-commerce landscape. Although the company has been actively expanding its presence in Tier 2 and beyond cities, its approach with Flipkart VIP takes a different direction, focusing on the cream of the crop—shoppers in top-tier cities like Delhi NCR, Bengaluru, Mumbai, and Kolkata, along with select premium PIN codes.
This geographical focus aligns with the understanding that online shoppers in major metro cities tend to show higher spending patterns, making them an attractive demographic. By channelling all its efforts towards this elite group, Flipkart aims to tap into a customer base known for its propensity to splurge on online purchases. It’s a strategy designed to maximize the program’s impact and ensure it caters to a high-value customer segment.
However, Flipkart VIP will likely face stiff competition from its arch-rival, Amazon Prime, which already boasts a strong presence in metro cities.
Amazon Prime’s success has been underpinned by its comprehensive offering of benefits, including digital entertainment, which has led to significantly higher average order values (AOV) for its Prime customers. A stark contrast emerges when comparing non-Prime shoppers on Amazon, who have an AOV ranging from approximately Rs 1,000 to Rs 1,200, with Prime customers commanding an impressive AOV of Rs 1,800 to Rs 2,000 – almost double that of their regular counterparts.
This resounding success has spurred Flipkart into action, prompting a strategic reevaluation and the launch of Flipkart VIP to go head-to-head with Amazon Prime. In August of this year, Flipkart unveiled two new programs, Flipkart Plus and Plus Premium, as the upgraded versions of its existing loyalty program.
Flipkart’s primary challenge has been its quest to draw customers away from the Amazon Prime ecosystem. Even with the existing Plus and Plus Premium tiers, this has proven to be quite a daunting task. It’s worth noting that these programs do not involve subscription fees; instead, they are contingent on the number of annual purchases a customer makes. To qualify for a Plus membership, customers need to place more than four orders, while Plus Premium demands over eight orders annually. These thresholds are reasonably attainable for the majority of metro customers.
Therefore, Flipkart’s VIP program offers more attractive incentives, such as a higher percentage of savings with no maximum cap, making it a more compelling proposition for high-value customers.
Both Plus and Plus Premium provided special incentives for over 5 million products on Flipkart, whereas VIP extends incentives across all products on the platform. Additionally, customers in the lower-tier categories were limited to earning an extra 2-4 per cent Supercoins, up to a certain limit. In contrast, VIP offers a more enticing 5 per cent extra savings with no cap.
Let’s dig more into the discount offering that Flipkart VIP brings to Indian shoppers.
Flipkart VIP’s Innovative Discount Strategy
Flipkart is shaking up the e-commerce game with its Flipkart VIP program, offering customers a flat 5% discount on all products.
But what’s the catch here?
The 5% discount is delivered through Supercoins, Flipkart’s points-based rewards system, which customers earn with each purchase on the platform. What sets this apart is that it applies on top of any existing offers, creating a double-dip discount experience.
With a cap of Rs 1,000 on the final discount, the Flipkart VIP program effectively extends its benefit to products priced up to Rs 20,000. This threshold covers a wide range of items and makes the program particularly attractive for the most significant and sizable purchases.
For non-Flipkart VIP customers, there’s still an opportunity to enjoy a flat 5% discount if they possess a Flipkart Axis Bank credit card. Interestingly, this card has no caps, providing an extra incentive for users. But for those who opt for Flipkart VIP, there’s no need for an additional credit card to access the coveted 5% discount.
In contrast, Amazon Prime customers who pay with the Amazon ICICI credit card receive 5% cashback in the form of Amazon Pay Balance on all platform purchases. Non-Prime users still enjoy a flat 3% cashback when using the same card. These credit card perks have made them an attractive choice, especially as India’s online shopping base expands.
Amazon boasts around 200 million monthly active users (MAUs) in India, of which 18-20 million are Prime members, these credit card deals are highly appealing.
“Amazon Prime customers buy more frequently and buy more categories. Prime customers are the most profitable customer for Amazon not only in India but globally,” Satish Meena, advisor to Datum Intelligence, said.
Timing is crucial; Redseer anticipates an 18-20% YoY growth in the gross merchandise value (GMV) of e-commerce companies during one month-long festive season, reaching Rs 90,000 crore in 2023.
The launch of Flipkart VIP couldn’t come at a more opportune moment, coinciding with the festive season “Big Billion Days”, which accounts for approximately 50% of the total GMV for e-tailers.
As the e-commerce market in India continues to evolve, innovative discount strategies like those of Flipkart VIP will undoubtedly play a pivotal role in shaping consumer behaviour and online shopping trends.
