Flipkart eyes Amazon Prime-like customers with launch of VIP membership

Flipkart eyes Amazon Prime-like customers with launch of VIP membership

In a fierce battle for dominance in India’s e-commerce market, Flipkart has thrown down the gauntlet by launching its own subscription service, Flipkart VIP, in direct competition with Amazon Prime. This strategic move comes just days before the onset of this year’s festive season sale, where both giants are poised to entice customers with steep discounts and exclusive perks.

Flipkart VIP, initially priced at an attractive Rs 499 per year, closely mirrors Amazon’s early Prime offering, significantly undercutting Amazon’s current Prime membership fee. The two services offer similar benefits, including early access to sales events, deep discounts, and expedited delivery options.

One of Flipkart VIP’s standout features is its promise of free same-day or next-day deliveries for members within select areas. However, it falls short of Amazon Prime’s nationwide reach in this regard. At present, Flipkart does not extend this service to all customers, giving Amazon an edge with its widespread Prime delivery coverage.

Flipkart VIP aims to streamline the customer experience by fast-tracking returns, guaranteeing pickup within 48 hours. In addition, subscribers will have access to dedicated customer service agents, a feature not currently offered by Amazon Prime.

While Amazon Prime includes a suite of entertainment services such as Prime Video, Music, Gaming, and Reading, Flipkart VIP currently lacks entertainment offerings. Instead, it allows members to reschedule flights at nominal rates through Cleartrip, expanding its appeal to travelers.

Prabh Singh, Senior Vice President for Growth (User and Ads) at Flipkart, stated, “This will elevate our customers’ shopping journey by enabling them with this premium service and seamless access to a myriad of benefits across the Flipkart group, including Cleartrip. Our unique reward ecosystem underscores our commitment to deliver the best experience to our customers.”

Although Flipkart has not disclosed the number of sign-ups or customer response to Flipkart VIP, it intends to address the nuanced needs of discerning shoppers in select areas.

Flipkart is focusing its VIP service on Delhi NCR, Bengaluru, Mumbai, Kolkata, and a few other exclusive PIN codes. These areas represent the crème de la crème of shoppers, who tend to spend more when shopping online. However, Amazon Prime already has a strong presence in several of the metro cities Flipkart is targeting with VIP.

Flipkart’s membership program includes three tiers: VIP, Plus, and Plus Premium. While Plus and Plus Premium are based on the number of purchases made in the past year and offer incentives, VIP stands out as a paid membership offering exclusive savings across all products on the platform. VIP members enjoy a 5 percent extra savings, with no cap, setting it apart from the other tiers.

This is not Flipkart’s first foray into the subscription service arena. In 2014, the company introduced Flipkart First, offering free next-day delivery and priority customer service for an annual fee of Rs 500. However, this service was discontinued after a few months.

Flipkart’s decision to launch VIP selectively is motivated by the success of Amazon Prime. Non-Prime Amazon shoppers have an average order value (AOV) of Rs 1,000-1,200, while Prime customers’ AOV is nearly double at Rs 1,800-2,000. This discrepancy highlights the potential for Flipkart to boost sales and customer loyalty among its top 50 million customers.

With Flipkart VIP, the company is offering a flat 5 percent discount on all products, capped at Rs 1,000, in the form of Supercoins. Non-VIP customers can also access a 5 percent discount with a Flipkart Axis Bank credit card, which competes with Amazon’s popular ICICI credit card offering cashback to Prime users.

As India’s e-commerce market continues to grow, analysts predict that the gross merchandise value (GMV) of e-commerce companies could increase by up to 20 percent year-on-year, reaching Rs 90,000 crore in 2023. Flipkart’s launch of VIP is strategically timed to capitalize on the festive season, accounting for about 50 percent of total GMV for e-tailers.

In this battle of giants, Flipkart’s VIP service promises to be a game-changer, offering attractive benefits to woo customers away from Amazon Prime and secure a larger slice of India’s burgeoning e-commerce pie.

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