Bengaluru : E-commerce major Flipkart has set a target of doubling the gross merchandise value (GMV) of the products sold on its platform to $8 billion (about Rs 50,000 crore) by December this year, against the current $4 billion, say company sources. The target was decided upon at a recent board meeting of the company, held in Singapore.
In the online retail sector, GMV is a term used to indicate the total sales value of the merchandise sold through the marketplace in a particular timeframe. Most e-commerce companies refrain from sharing their revenue, owing to which the GMV run rate is often used to gauge the financial health of an online retailer. For any such company, the actual revenue is a small proportion of the GMV.
Flipkart has also set a target of shipping a billion units a month and serving 100 million customers by 2018. As of now, Flipkart ships about eight million units a month.
The targets were announced to the company’s employees at a recent town hall meeting.
If met, the GMV target for this year will widen the gap between Flipkart and rivals such as Snapdeal and Amazon India. Sources estimate Amazon India’s GMV at about $1 billion, while Snapdeal has said it aims to touch a GMV of $3 billion by March 2015.
In terms of valuation, Flipkart had already gone past competitors, with the company valued at about $12.5 billion, said a source.
The e-commerce sector in India is in a hyper-growth mode, primarily due to the high penetration of smartphones and internet. As of now, India has the world’s third-largest population of internet users, even as only a fifth of its population is present online.
For several e-commerce companies, 2014 was a breakthrough one, as not only did they carry out multiple funding rounds at steep valuations, they also saw a sharp surge in sales.
Consulting firm Technopak estimates the Indian e-tailing market will be worth $32 billion by 2020, more than 10 times its value of $2.3 billion in October last year.
Between 2013 and 2014, Flipkart grew five times in terms of volume, while Snapdeal said its gross sales value grew six times during the same period. To fuel its growth, Flipkart is working on several discount and sale events this year. It might carry out another ‘Bid Billion Day’ sale in the coming months (the first was held in October 2014, through which the company said it had clocked revenue of $100 million in only 10 hours).
Starting Friday, Flipkart will hold a two-day fashion and lifestyle sale, the company’s first category-discounting event. Through the following two days, the portal will run around 250 offers on several brands and host many steal-deals.
The lifestyle and fashion categories are expected to drive growth for e-commerce portals in the near future. Flipkart, along with Myntra (which it had acquired earlier), are believed to account for 45-50 per cent of the online fashion and lifestyle retail market.