Update On :03 June 2016
Indiaâ€™s largest e-commerce company - Flipkart has started offering customers an option to pay via monthly installments without charging them interest as it seeks to boost the sales of higher-priced products such as premium smartphones, televisions, home appliances and other electronics.
Flipkart tied up with lender Bajaj Finserv Ltd and electronics brands to launch the consumer finance product earlier this month. Customers can buy electronic products costing more thanÂ Rs.5,000 and pay in equal monthly installments (EMIs) over three, six or nine months. Flipkart isnâ€™t charging any fees, interest or asking for down payments from customers.
â€œAccording to our surveys, consumers are willing to pay more over time for essential things,â€ said Surojit Chatterjee, senior vice-president, product, Flipkart. â€œAnd in this case, itâ€™s not credit as such because there are no fees or interest. In the three weeks that weâ€™ve launched the no-cost EMIs, weâ€™ve seen customers have upgraded their purchases because of it. Weâ€™re thinking of affordability as an overall problem to solve. We will come at this problem from different angles.â€
The launch of the interest-free EMIs comes as Flipkart is trying to turn around its business, rev up sales growth and stem market share losses to Amazon.
For e-commerce firms, increasing sales of high-priced products such as TVs, refrigerators and washing machines is crucial.In March, the government banned e-commerce firms from influencing product prices, even as it allowed foreign direct investment in online marketplaces. There is a lack of clarity on whether the rules cover offerings such as EMIs and so-called cash back schemes.
When asked if Flipkartâ€™s interest-free EMI scheme violates norms, Chatterjee said: â€œWeâ€™ve talked to legal experts and regulators, and this already happens in the offline world. Weâ€™ve done our due diligence appropriately before launching.â€
Once a customer buys a product on Flipkart, Bajaj Finserv will take up the task of collecting the payments. All the three parties - Flipkart, Bajaj and the electronics brand - will share the cost of offering the EMIs, Chatterjee said.
Chatterjee has set up a digital products team that is working on launching more offerings such as the interest-free EMIs.
â€œEMIs help push demand for high ASP (average selling price) goods,â€ said Harish H.V., partner, Grant Thornton. â€œSchemes like zero-interest help persuade consumers to up-trade and even get a new bunch of customers at certain price points. People feel more comfortable buying high-value items on credit.â€
News Source From : http://www.livemint.com/Companies/jK52IG0gYzKXELarOmRGNL/Flipkart-launches-payment-scheme-to-boost-sales-of-costly-pr.html
Image Courtesy : http://www.dealstreetasia.com/wp-content/uploads/2015/10/flipkart1-e1445473834421.jpg