Flipkart claims to be the second biggest ‘buy now, pay later’ player ahead of Paytm, Amazon
Flipkart claims to be the second biggest ‘buy now, pay later’ player ahead of Paytm, Amazon
Flipkart, which is owned by Walmart, stated on Thursday that its ‘Buy Now, Pay Later’ (BNPL) business had doubled its user base. In just seven months, Flipkart Pay Later has surpassed six million users.
Customers can get credit up to Rs. 1 lakh from Flipkart Pay Laters, based on their credit history. Customers can shop as many times as they want throughout the month and pay the entire bill in instalments over 30 days or via EMI.
Currently, the service is only available on Flipkart and Myntra, but it plans to expand. After that, players like Simpl, LazyPay, Mobikwik, Paytm Postpaid, and Amazon Pay Later could pose a threat.
Second biggest players in the BNPL market
After Simpl, Flipkart Pay Later is the second largest ‘Buy Now Pay Later’ player with 6 million subscribers. The function can be used to buy things from a variety of categories, including food, lifestyle, general merchandise, and home.
It also offers mobile phones, consumer electronics, and major appliances on longer-term EMI plans. On a monthly basis, Flipkart Pay Later performs 3 million long-term EMI transactions, with 90 per cent of these transactions coming from repeat consumers.
The startup claims to provide a frictionless checkout experience because the platform does not demand any paperwork or a deposit before giving a credit line.
“According to studies, the Buy Now Pay Later (BNPL) market would rise ten times in the following five years, exceeding $40 billion by 2026. According to Dheeraj Aneja, senior vice president and head of Flipkart’s fintech and payments business, “45 per cent of customers choose to make purchases with BNPL choices even if they have a credit card because of the simplicity that BNPL gives.”
Flipkart is now tying all the loose ends in preparation for a successful public launch in 2023. In July 2021, the firm raised $3.6 billion in preparation for this aim, and it is now worth $37 billion. It had planned to go public in the United States in November 2022, with a valuation of $50 billion, but the plan was pushed back owing to market instability.
The company plans to go public in 2023, with a market capitalisation of $60-70 billion. According to media sources, Flipkart is trying to expand its online healthcare and travel booking services to make this a reality.
Why “Buy Now, Pay Later” (BNPL) Is Growing in Popularity
Buy Now, Pay Later (BNPL) has become one of the most in-demand financing options around. Discover why it’s becoming so popular, including the pros and cons
A new fintech segment has emerged due to the increase in popularity of “Buy Now, Pay Later” (BNPL). The BNPL industry is valued at $97 billion and is expected to grow. With more people opting for this option, it’s critical to consider the benefits and drawbacks of using such services.
What does “Buy Now, Pay Later” (BNPL) mean?
Buy Now, Pay Later is a service that allows you to take advantage of payment choices that are delayed. It’s good for people who need things or services right away but don’t have the funds; they can use this option to get their items without paying right away.
According to Adal Flores, Kueski’s CEO and Co-Founder, “Buy-Now-Pay-Later (BNPL) has become popular around the world because it allows them to provide instalment products to customers who aren’t eligible for credit cards, live in countries where credit cards aren’t widely accepted, or simply distrust big banks. Unlike credit cards, BNPLs provide consumers with simple and transparent pricing methods and the ability to pay for things in instalments.”
What are the benefits of using BNPL?
One of the benefits of BNPL is the ability to purchase expensive items when cash is scarce. Furthermore, no credit history is needed, making this option available to many people who would not otherwise be able to take advantage of payment options with a longer cheval. It might be a different way of ensuring financial inclusion and access.
“Kueski, Mexico’s largest BNPL and online consumer lender, operates in a country where 60 per cent of the population lacks access to banking services and 82 per cent lacks access to credit cards. While banks offer traditional instalment loans for specific goods, interest rates on offline BNPL are often exorbitant, deterring many people from qualifying for a loan in the first place. This scenario is made worse because credit bureaus have little to no information on most residents, which can be explained by the fact that many people operate in the informal economy and wish to avoid the ‘financial grid.’ “Flores continues.
According to Rhett Roberts, CEO of Loan Pro, BNPL solutions are becoming more popular in brick and mortar establishments. He stated, “The financial products are geared to meet the user where they are at and deliver a convenient, frictionless, and simplified experience, reducing most of the historical friction associated with originating a financial product. This trend is expected to continue, with all financial products becoming better-specialised fits to meet customers where they are, with an emphasis on the customer experience.”
BNPL also has other advantages, such as:
Saving time: Consumers can get what they need now rather than waiting for their next payday.
Ease of Use: Payments can be made in instalments, which is incredibly practical and easy, especially for more expensive things.
Convenience: Consumers don’t always have to worry about paying high-interest rates or late penalties!
What are the BNPL’s drawbacks?
One of the disadvantages of BNPL is that it makes debt and interest accumulation simpler. Some BNPL firms perform a credit check, which may limit who is eligible for these services. BNPL payments were missed by 43 per cent of Gen Zers at least once this year. It’s evident that many consumers are misinformed about the mechanics of this option, resulting in additional unneeded debt. According to Daniela Corrente, founder of Reel, “the average American household owes roughly $14,200 in credit card debt alone.”
There aren’t many other drawbacks, but this type of service raises several concerns:
The cost: While consumers may pay less upfront for their items, if they do not pay them off in full, the cost can quickly mount!
Indebtedness: This type of financing greatly escalates debt, causing serious problems in the months ahead.
What does BNPL’s future hold?
This new market is projected to continue to grow as its popularity grows. People are increasingly looking for strategies to better manage their finances to avoid potential problems. There’s no reason why users can’t benefit from this fintech service as long as they prepare ahead of time and pay off all instalments on schedule.
“The growing popularity of Buy Now Pay Later demonstrates that payment decisions are no longer primarily based on rewards. And, with Visa and Mastercard having recently entered the BNPL and A2A markets, the real question today is how long it will take for cards to become the ‘alternative’ payment method “, GoCardless Director of Product Marketing Siamac Rezaiezadeh stated.
In the long run, TrinityRank founder Stefan Ateljevic believes BNPL will blend with other fintech breakthroughs. He declared, “The eventual integration of cryptocurrencies and BNPL systems, in my opinion, is unavoidable. It’s only a matter of time before bitcoin payments join the mix as Blockchain technology becomes more mainstream. Clients will benefit from unparalleled flexibility, simplicity, and security thanks to cameras and sensors connected to the internet of things via blockchain and AI. This technology is set to collide, making it easier for customers to make payments in the future.”
About Flipkart
Flipkart is an Indian e-commerce company with headquarters in Bangalore, Karnataka, and a private limited company in Singapore. It primarily concentrated on online book sales before expanding into other product categories such as consumer electronics, fashion, home goods, food, and lifestyle products.
The service’s primary competitors are Amazon’s Indian affiliate and homegrown rival Snapdeal. As of 2017, Flipkart had a 39.5 per cent market share in India’s e-commerce business. Due to its acquisition of Myntra, Flipkart has a strong position in the clothing sector and is “neck and neck” with Amazon in the sale of gadgets and mobile phones. It owns PhonePe, a UPI-based mobile payment service.
Walmart purchased a 77 per cent controlling stake in Flipkart for US$16 billion in August 2018, valuing the company at roughly $20 billion.
History
Flipkart was founded in October 2007 by Sachin Bansal and Binny Bansal, both IIT Delhi grads and former Amazon employees. The company’s first concentration was on online book sales with statewide shipping. It grew in popularity over time, and by 2008, it was processing 100 orders each day. In 2010, Lulu.com sold WeRead, a social book discovery business based in Bangalore, to Flipkart.
Partnerships and acquisitions
Acquisitions
Flipkart bought the digital distribution company Mime360.com and the Bollywood portal Chakpak’s digital content inventory in 2011. Flipkart created Flyte, a DRM-free online music store, in 2012 due to this acquisition. The site was unsuccessful and stopped down in June 2013 due to competition from free streaming providers.
The company bought Letsbuy, in 2012 and Myntra, an online fashion retailer, for $280 million in May 2014, with an eye on the Indian retail industry. Myntra operates as a separate entity from Flipkart, concentrating on different market areas. Flipkart bought Appiterate, a Delhi-based mobile marketing automation startup, in April 2015. It announced that Appiterate’s technology would be used to improve its mobile offerings. It bought a minority share in MapmyIndia, a digital mapping company, in December 2015.
Flipkart paid $70 million to Rocket Internet for the online apparel shop Jabong.com and the UPI mobile payments startup PhonePe in 2016. It invested $2 million in TinyStep, a parenting information firm, in January 2017 and bought a 27 per cent share in Arvind Fashions Limited’s newly established subsidiary Arvind Youth Brands for $35 million. Flying Machine is owned by Arvind Youth Brands.
Flipkart Wholesale just established a digital marketplace for kiranas and small businesses. It paid $204 million for a 7.8% interest in Aditya Birla Fashion & Retail in October 2020.
Partnerships
eBay started in April 2017 that it would sell its Indian business, eBay, to Flipkart in exchange for a $500 million investment. While eBay stated that the relationship would eventually provide Flipkart access to eBay’s worldwide vendor network, these intentions never materialised. Flipkart offered to buy Snapdeal, its largest domestic competitor, for $700–800 million in July 2017. Snapdeal, which was looking for at least $1 billion, turned it down.
Flipkart and Authentic Brands formed a collaboration in August 2019 to licence and distribute Nautica in India. On November 19, 2019, the company invested $4 million in the consumer engagement and rewards platform EasyRewardz.
Mobile retailing
Flipkart teamed with Motorola Mobility in February 2014 to become the exclusive Indian retailer of the Moto G smartphone. Motorola and Flipkart collaborated on the Moto E, a phone aimed largely at emerging regions like India. Its website crashed due to high demand for the phone following its midnight launch on 14 May. Flipkart went on to hold exclusive Indian launches for several smartphones, including the Xiaomi Mi 3 in July 2014 (which sold out in less than 5 seconds), the Redmi 1S and Redmi Note in late 2014, and Micromax’s Yu Yunique 2 in 2017.
In 2017, Flipkart surpassed Amazon India with a 51 per cent share of total smartphone shipments in India (33 per cent ).
Flipkart held a massive sale on October 6, 2014, in commemoration of the company’s anniversary and the Diwali season, which it dubbed “Big Billion Day.” In just ten hours, the event gathered a massive crowd and led to the sale of $100 million worth of items. On social media, the event was panned due to technological issues and stock shortages that happened throughout the event.
In October 2015, Flipkart relaunched the Big Billion Day event as a multi-day event exclusive to the Flipkart app. It beefed up its supply chain and added more fulfilment centres to meet client demand and made $300 million in gross sales throughout the event, with fashion sales accounting for the most volume and mobiles for the most value. In 2017, Flipkart’s Big Billion Days promotion sold 1.3 million phones in 20 hours on September 21, more than twice the volume sold on the first day of the same event in 2016.
Flipkart started blocking access to its website on mobile devices in 2015, instead asking customers to download the site’s mobile app. The next month, Myntra went even further and shut down its website across all platforms, relying depend on its app. However, the “app-only” approach failed for Myntra, resulting in a 10% drop in revenue, and the company’s main website was reinstalled in February 2016. The experiment with Myntra sparked speculation that Flipkart would follow suit, but the business chose not to. It developed a new mobile website called “Flipkart Lite” in November 2015, which delivers an experience similar to the Flipkart app and operates on smartphones.
Acquisition by Walmart
On May 4, 2018, it was announced that Walmart had won a $15 billion bidding war with Amazon to acquire a controlling interest in Flipkart. Walmart revealed its intention to buy a 77 per cent controlling stake in Flipkart for $16 billion on May 9, 2018. Sachin Bansal, a co-founder of Flipkart, quit the company after the takeover. Marc Lore, CEO of Walmart eCommerce US, now oversees the remaining management team.
Walmart CEO Doug McMillon acknowledged the market’s “attractiveness,” noting that their purchase “is a chance to partner with the firm that is driving the market’s revolution of eCommerce.” Indian traders protested the agreement, believing it to be a threat to domestic trade.
Walmart stated in a filing with the United States Securities and Exchange Commission on May 11, 2018, that a condition of the deal was that Flipkart’s current minority shareholders “may need Flipkart to effect an IPO following the 4th anniversary of the closing of the transactions at a valuation no less than that paid by Walmart.”
Following Walmart’s announcement, eBay said that it would sell its investment in Flipkart to the business for around $1.1 billion and relaunch its own Indian operations. There is immense development potential for e-commerce in India, an opportunity for various competitors to flourish in India’s diverse, domestic market.” Softbank recently sold its whole 20% ownership in Walmart to Walmart without disclosing the deal’s details.
The purchase was completed on August 18, 2018. Walmart invested $2 billion in the company as equity.
Binny Bansal, the CEO of Flipkart, resigned on November 13, 2018, after being accused of “severe personal misbehaviour.” “While the investigation could not find evidence to support the complainant’s allegations against Binny, it did disclose major judgement errors, including a lack of transparency,” Walmart said.
Business structures
According to a November 2014 investigation, Flipkart operated through a complicated business structure, including nine companies, some of which were registered in Singapore and others in India. The co-founders of Flipkart sold WS Retail to a group of investors led by Rajeev Kuchhal in 2012. Flipkart Pvt. Ltd, a Singapore-based company, owns Flipkart’s Indian operations. Flipkart Internet Pvt. Ltd, which manages the e-commerce platform Flipkart.com, which runs the wholesale business, and Flipkart Logistics Pvt. Ltd, which administers Ekart, are the eight Indian companies owned by the Singapore-registered organisation.
Funding
Flipkart’s first development budget was INR 400,000 (US$5,200). It raised money from venture capital firms Accel India ($1 million in 2009) and Tiger Global ($10 million in 2010 and $20 million in June 2011). Flipkart completed its fourth round of fundraising on August 24, 2012, receiving a total of US$150 million from MIH (part of the Naspers Group) and ICONIQ Capital. On July 10, 2013, the firm announced that it had raised an additional $200 million in funding from the last investors Tiger Global, Naspers, Accel Partners, and Iconiq Capital.
It claimed sales of 40 million rupees (US$520,000) in the fiscal year 2008–2009, 200 million rupees (US$2.6 million) in the fiscal year 2009–2010, and 750 million rupees (US$9.8 million) in the fiscal year 2010–2011.
Flipkart recorded a loss of US$37 million in the fiscal year 2012–13. It got $160 million from private equity investors in July 2013.
Flipkart raised an additional US$160 million in October 2013 from new investors Dragoneer Investment Group, Morgan Stanley Wealth Management, Sofina SA, and Vulcan Inc., with current investor Tiger Global contributing a part of the funding.
Flipkart started on May 26, 2014 and it has raised US$210 million from DST Global, Yuri Milner, and last investors Tiger Global, Naspers, and Iconiq Capital. And announced a $1 billion funding round on July 29, 2014, with Tiger Global, Accel Partners, Morgan Stanley Investment Management, and a new investor, Singaporean sovereign wealth fund GIC.
Flipkart had a market capitalisation of $11 billion in December 2014 after receiving $700 million in a new round of funding. It applied to become a public company with Singapore-based corporate regulator ACRA on December 20, 2014. More than 50 Indian investors contributed $700 million in long-term strategic investments, according to the business.
Baillie Gifford, Greenoaks Capital, Rowe Price Associates, and Qatar Investment Authority joined Flipkart’s board of directors after raising $700 million in capital. This financing round included current investors DST Global, GIC, ICONIQ Capital, and Tiger Global. The app raised $550 million in new fundraising from existing investors in May 2015, bringing the company’s total valuation to $15 billion.
Flipkart had raised a total of $3 billion from 16 key investors across 12 rounds of fundraising by August 2015, after raising another $700 million. It received $1.4 billion in investment from investors including eBay, Microsoft, and Tencent in April 2017. SoftBank Vision Fund invested an additional US$2.5 billion in Flipkart on August 10, 2017.
Flipkart Marketplace Singapore invested $3,463 crore in Internet on September 19, 2018. According to regulatory records, the purchase was split into two halves.
Regulatory action and lawsuits
The Indian Enforcement Directorate investigated Flipkart in November 2012 for alleged violations of the Foreign Exchange Management Act of 1999’s foreign direct investment laws. The Enforcement Directorate raided Flipkart’s offices on November 30, 2012. The agency seized documents and computer hard discs. Flipkart was found to violate the Foreign Exchange Management Act by the Enforcement Directorate in August 2014. Several e-commerce companies, including Flipkart, were found to have violated foreign investment laws by the Delhi High Court.
The app was accused of violating foreign investment rules in a public interest litigation hearing in January 2016. The court requested the Reserve Bank of India’s most recent foreign investment policy circular. The Department of Industrial Policy and Promotion reiterated in the same month that it did not recognise the online retail marketplace concept. The Maharashtra FDA had taken action against Flipkart, for selling pharmaceuticals without a legal licence, according to Health Minister J P Nadda.
House brands
Citron (home appliances) and Digiflip (clothing) are two of Flipkart’s house brands (formerly for electronics and accessories). It introduced new house brands in 2017, including Billion (smartphones), Smartbuy (electronics accessories, which basically replaced Digiflip), and MarQ (apparel) (for large appliances, although its launch was complicated by a trademark dispute with an existing company, Marc Enterprises).
Flipkart began selling Nokia televisions in 2019. The first product introduced under the licencing deal was a 55-inch Android TV-based 4K Smart TV. On June 4, 2020, a 43-inch television was launched.
Flipkart Video
Flipkart launched Flipkart Video, an in-app streaming service, in August 2019 to compete with industry rivals like Amazon, which provide premium video options. The original content lineup was handpicked from services like Viu, Voot, and TVF.
Flipkart Video Originals
Flipkart forayed into original video development, dubbed as Flipkart Video Originals, to increase its content offering on Flipkart Video. The first episode aired on October 19, 2019. Farah Khan presented a Bollywood celebrity quiz programme called Back Benchers.
Flipkart Pay Later
What is Flipkart Pay Later?
Flipkart Pay Later is a customer-centric innovation from Flipkart that focuses on online buying affordability and convenience. Pay Later gives you up to Rs 1 lakh in credit to spend on the app throughout the month. The term “convenience” refers to receiving a single bill for all of your transactions, easy one-click checkout, and paying your payment at the end of the month or in 12 monthly instalments.
The nicest thing is that you can pay for your products after using them.
What’s in it for you?
When you pay with Flipkart Pay Later, you get access to three crucial features:
Credit line: Flipkart Pay Later is a customer-centric innovation that focuses on online buying affordability and convenience. Pay Later gives you up to Rs 1 lakh in credit to spend on Flipkart throughout the month. The term “convenience” refers to receiving a single bill for all of your transactions, easy one-click checkout, and paying your payment at the end of the month or in 12 monthly instalments.
The nicest thing is that you can pay for your products after using them.
Who can use the Flipkart Pay Later payment option?
Do you dislike scrambling for cash while a Flipkart Wishmaster stands outside your door? Don’t have time to enter two-factor authentication codes while paying with your debit or credit cards? Flipkart Pay Later was created with you in mind. It makes buying more convenient and simple! Make your purchase, wait for it to arrive, and then utilise it. After that, you can make the payment the following month.
Flipkart Pay Later is a convenient buying option whether you have many cards or none at all.
Are you eligible for Flipkart Pay Later?
In only 30 seconds, you may apply for Flipkart Pay Later! To apply, simply enter your PAN and Aadhaar numbers, validate your documents, wait 30 seconds, and then begin buying with Flipkart Pay later!
With Flipkart Pay Later, it benefits galore!
Pay when you are ready: You can pay at the end of the month, just like you would with a standing account at your local grocer. The payment due date is set to the 5th of the following month by default or 12 months over EMIs. Of course, you may always pay the outstanding balance whenever you have the time, money, and access to the internet.
Try before you buy: You have the option of receiving the product, trying it out, and then making the payment.
Club transactions: In one month, did you purchase a car mobile charger, a wallet, and a pair of sunglasses from Flipkart? No worries. When you choose this payment method, you may quickly pay for all three orders at once.
Payment is completed quickly: You do not have to go through multiple stages to finish your payment. Enjoy the convenience of one-click transaction payment.
Always ready to help: You may expect a near-100 per cent success rate when you use Flipkart Pay Later as your payment method.
Benefits that are better and more convenient
Flipkart Pay Later is a cashless, paperless service that requires no maintenance fees to stay functioning. Take a look at how using this payment method is both simple and beneficial.
When you cancel an order or return goods, you will receive an immediate refund.
Because there are no interest or account maintenance fees, Flipkart Pay Later is a more enticing financing option than credit cards. You can pay with a credit card or any other kind of online payment.
Things to remember while using Flipkart Pay Later
While the Flipkart Pay Later option provides a slew of features that make purchasing on Flipkart more enjoyable, there are a few things to remember. Remember that you cannot pay off your balance in instalments. You can’t overpay – this isn’t a wallet where you can stash your cash. If you have an outstanding balance, you will be told to pay the complete amount to keep the Flipkart Pay Later benefit. This payment option is available on the mobile app and mobile website, and it will be introduced to the desktop site in the near future.
