If you search for “Flipkart cash burn” on Google, the headlines from the last few years sound like a broken record. 

2017: ‘Flipkart says cash burning irrelevant’

2018: ‘Flipkart Burnt Through Nearly Half Of US$6.1 Bn It Raised From Investors In The Last 10 years’

2019: ‘Flipkart cash burn at US$1 billion under Walmart’ 

And then, in 2021 2021 Indian Online Seller Flipkart to reduce burn rate by 50% to reach sustainable profitability Read more : “Flipkart to reduce burn rate by 50% to reach sustainable profitability” 

The Walmart-owned Indian e-commerce giant thought 2022 would be the year it finally succeeded in slowing its cash burn. But alas. Thanks to its social commerce platform Shopsy, the number still remains alarmingly large. Sources who work closely with Flipkart tell The Ken the company has been burning a “significant amount of money” keeping Shopsy running, offering sharply discounted products priced as low as Rs 5 (US$0.07). They declined to quote the actual amount. 

Launched in July 2021, Shopsy was Flipkart’s answer answer The Ken Flipkart’s Shopsy weapon to counter Meesho’s e-commerce incursion Read more  to six-year-old platform Meesho, which has grown to dominate e-commerce in smaller towns and cities on the back of its social commerce chops. By the end of last year, the SoftBank-backed unicorn had begun moving into Flipkart’s direct-to-consumer (D2C) territory, bolstered by its deep inroads into the low-income, tier-2 and beyond cities and towns. 

It is territory that Flipkart had only a tenuous hold on but desperately wants more of. Of India’s nearly 600 million-and-growing internet user base, only a third would be e-commerce customers. The rest, low-income users from India’s hinterlands, are usually young and frequent social media channels such as YouTube, but they’re also very distrustful of the online shopping experience.  

Flipkart is hoping that Shopsy’s reseller-oriented model bridges that trust, says an executive with Flipkart. The executive and others The Ken spoke to requested anonymity as they aren’t authorised to speak to the media. 

Matter of trust

Resellers are the heart and soul of social commerce. Unlike in e-commerce, where there are just two sides—the seller and the buyer—social commerce is a three-sided marketplace. Resellers curate a range of products and sell them on other platforms such as Instagram and WhatsApp, earning a commission off each sale

Flipkart also wants Shopsy to instil an affinity for e-commerce in these users and subsequently funnel them towards the host of high-frequency online consumer services that Flipkart offers, says the executive.