Bengaluru: Flipkart co-founder and executive chairman Sachin Bansal loves the word “billion”—the company’s flagship sale event Big Billion Days is a reference to his hope of selling products to a billion Indians or more at some point.
Now, Bansal is building a budget brand called Billion across categories such as electronics, appliances and accessories to attract new shoppers to Flipkart, three people familiar with the matter said. Flipkart may also offer a low-priced smartphone under the Billion brand to compete with the likes of Xiaomi and Micromax, the people said on condition of anonymity.
Flipkart has already launched mixers, backpacks and a few other products under the Billion brand.
Billion is Bansal’s big project after he was forced to cede the CEO role to Flipkart co-founder Binny Bansal in January 2016 after a disastrous year in which the company lost ground to arch-rival Amazon India (Amazon Seller Services Pvt. Ltd). One year later, Binny himself was replaced by Kalyan Krishnamurthy, a representative of Flipkart’s largest investor Tiger Global Management.
“The brand is aimed at Middle India. You need a different set of products for customers in smaller cities and towns and that’s what Billion will do,” one of the people cited above said.
Flipkart declined to comment.
E-commerce companies have been struggling to attract new users over the past 18 months. It has become clear now that e-commerce firms and investors overestimated the spending power of most Indians and, in turn, the potential of India’s $14-15 billion online retail market, which barely grew last year.
Bansal’s attempt at building the Billion brand is one of Flipkart’s supplementary bets. But for the 35-year-old entrepreneur, the project is his first big test since he lost the CEO position. Bansal has built his own team, mostly comprising young managers outside of Flipkart’s core organization, the people cited above said.
Billion is also part of Flipkart’s efforts to increase sales of private label products, which offer higher margins to online retailers than those sold by third-party brands.
While Flipkart raised as much as $1.4 billion in fresh funds in April, the company needs to control its spending as it tries to cut losses and prove that it can build a profitable business. The online retailer has slashed its marketing spending since the start of 2016 and plans to keep it at low levels. That means it’s more likely that a new online shopper will end up first at rival Amazon India, a risk Flipkart believes it will negate by offering exclusive products, among other things.