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Flipkart diversifies into advertising

News, 06 March 2015

BANGALORE: Flipkart, the ecommerce business, is set to become an online ad publisher as it diversifies into new areas in the search for profits ahead of a potential public listing.

It already carries ads from financial services brands on its site but these are not currently a major revenue generator.

"We know something about the most important decision that a consumer makes, that is purchase," Mekin Maheshwari, chief people officer at Flipkart, told the Times of India.

"What you like on Facebook versus what you spend your own money on – the value of that [latter] data is a lot higher," he added

In addition to selling ads, Flipkart intends to move into the consulting arena, with a new unit working with small and medium businesses to build their brands online. The etailer currently has about 30,000 such sellers on its platform, and aims to more than treble that over the next 12 months.

"(The initiative) is broader than just Flipkart and may not be completely online," said Maheshwari. "We will enable emerging brands in India to carve out their internet strategy."

A third area identified as having potential for generating profits is furniture, where margins range from 40% to 60%.

"We will have an added focus on furniture category on our commerce platform, which we look to build ground-up," said Ankit Nagori, head of marketplace at Flipkart.

But not everyone thought this diversification approach was the right one. "This is a mistake that many Indian companies make: try to become conglomerates that are in several businesses," said Vivek Wadhwa, a fellow at Stanford Law School and director of research at Duke University.

"It has worked for a few old line companies but does not work in the internet space. Here you need to focus and execute with precision."

That view has not deterred a senior Google executive from relocating from the US to India to become Flipkart's chief product officer. "The energy in Bangalore feels like the [Silicon] Valley," said Punit Soni. "It is the opportunity to create the biggest impact and made sense after the amazing journey at Google."

Data sourced from Times of India, TechCrunch; additional content by Warc staff