Case Study of an Emerging Giant in The Online World FLIPKART

Submitted By :Harish K. Raman Symbiosis Law School, Pune (Constituent Of Symbiosis International University) Bba.LLb(C) 1st Year P.N.R.-13010124268 Contact Information Permanent Address Flat No. 4, Shree Bishnu Apartments, 37 Bosepukur Purbapara, Kolkata 700107 Mobile Number +919062209794; +918796807321 E-Mail Address - harishkraman@gmail.com

Case Study of an Emerging Giant in the Online World FLIPKART

ABSTRACT :
Innovation brings with itself a new set of challenges. The E-Retailing form of market was fairly something unheard of to the Indian consumer in 2007. Flipkart which has carved a niche for itself in terms of market share, goodwill and popularity in the online market to the extent that retailers are coming under threat because of its discounts and smooth operations. Started with an initial capital of four lakhs it now aims for annual turnover of around Rs. 4500 crores. It started off with books and later on started diversifying its market into apparel, electronics, softwares, music, etc. With over seventeen and a half million book titles listed, eighteen different categories, more than four million registered users and sale of fifty-five thousand items a day its quite a sensation in todays online market. Moreover with such a large area to cover distribution and operational challenges crop up. Another challenge was online payment which the consumers were hesitant to make. Flipkart came up with their unique policy of Cash-On-Delivery. This case study aims to understand the functioning of Flipkart, its methods of operations, distribution, warehousing and delivery systems. The ascent of Flipkart to capture the online market in India in just four years. The strategies implemented by it to create online business. Its ability to stand out among numerous E-Retail sites. What has Flipkart got that makes its model so robust? It aims to predict the future road map and also aims to find significant threats to Flipkart in the near future. Key Words: E-Retailing, Flipkart, Online Market, Marketing Strategies

Case Study of an Emerging Giant in the Online World FLIPKART

Flipkart went live in 2007 with the objective of making books easily available to anyone who had internet access. Today, they're present across various categories including movies, music, games, mobiles, cameras, computers, healthcare and personal products, home appliances and electronics, stationery, perfumes, toys, apparels, shoes and still counting! Be it their pathbreaking services like Cash on Delivery, a 30-day replacement policy, EMI options, free

shipping - and of course the great prices that they offer, everything they do revolves around their obsession with providing their customers a memorable online shopping experience. Then there's their dedicated Flipkart delivery partners who work round the clock to personally make sure the packages reach on time. So it's no surprise that they're a favorite online shopping destination. One of the biggest names in the Online Retail Industry and a Leading e-Commerce player in the Country; Founded by Sachin Bansal & Binny Bansal in Bangalore, Karnataka in 2007. Which was Started with initial capital of INR 4 lakh contributed by the founders, 7 warehouses, offices and delivery centers across India. With over 17.5 million book titles listed, 16 different categories, more than 4 million registered users and sale of 55000 items a day their operations are simply huge. Had 8600+ employees till December 2013. Had a massive Revenue of around 1200 Crores (Fy 2012-13) and plans to reach 2500 Crores this year. Flipkart was established in 2007 by Sachin Bansal and Binny Bansal, both alumni of the Indian Institute of Technology Delhi. They worked for Amazon.com before quitting and founding their own company. Initially they used word of mouth marketing to popularize their company. A few months later, the company sold its first book on flipkart.com - John Woods Leaving Microsoft to Change the World. Flipkart broke even in March 2010 and claims to have had at least 100% growth every quarter since its founding. The store started with selling books and in 2010 branched out to selling CDs, DVDs, mobile phones & accessories, cameras, computers, computer accessories and peripherals, pens & office supplies, other electronic items such as home appliances, kitchen appliances, personal care gadgets, health care products etc. Today, as per Alexa traffic rankings, Flipkart on rank 170 on Alexa and 6 on Google Rankings is among the top 10 Indian web sites and has been credited with being India's largest online bookseller with over 17 million titles on offer. Initially Flipkart was funded by the Bansals themselves with 4 Lakhs(INR). Flipkart has since then raised two rounds of funding from venture capital funds - Accel India (in 2009) and Tiger Global Management (up to the tune of US$10 million) (in 2010). Private equity firms Carlyle and General Atlantic are in talks to jointly invest about $150 million to $200 million in Flipkart, according to sources. On October 10, 2013 barely three months

after Flipkart.com raised $200 million, the online retailer received another large fund infusion of $160 million (around Rs.990 crore), most of it coming from new investors.1 Flipkart has made a series of Acquisitions. If we see them in a chronological order - 2010: weREAD, a social book discovery tool. The goal was to give Flipkart a social recommendation platform for buyers to make informed decisions based on recommendations from people within their social network, 2011: Mime360, a digital content platform company, 2011: Chakpak.com is a Bollywood news site that offers updates, news, photos and videos. Flipkart acquired the rights to Chakpaks digital catalogue which includes 40,000 filmographies, 10,000 movies and close to 50,000 ratings. Flipkart has categorically said that it will not be involved with the original site and will not use the brand name. 2012: Letsbuy.com is India's second largest e-retailer in electronics. Flipkart has bought the company for an estimated US$ 25 million. The process of attracting a prospective customer to view the site and try to make sure he/she purchases the goods is called the Order Lifecycle. Attract users to the site through Family, Friends, Search Engine Optimization, Search Engine Marketing, Word of Mouth, Brand Building, etc. Provide selection to the consumer by making it easy to Find & Discover products. Provide details to evaluate a product like Description, Specifications, and User Generated Content and perhaps the most important aspect Price well. Have to be competitive to the most obvious options. Provide convenient payment options Online, like credit card, net banking, debit card, wire transfer, phone banking and Cash On Delivery. Confirm payment. Get the item Procure from Supplier Just-in-time a good Supplier selection team is essential. Keep Inventory -Inventory Prediction, Planning. Quality Checks - Clean & Check for sanity, Pages missing, MRP printed lesser than told to you. Pack the Item - Tamper proof, weather proof, breakage proof. Select courier & hand-over Courier performances vary across regions a lot. Get tracking id & communicate to customer. Follow-up for timely delivery. Take care of returns - faulty product/user changes their mind. Minimize returns. When we see the heights Flipkart has managed to reach we think What went right for this site to get such a response..?The first and foremost was that we Indians were discarding our stone-age ways and beginning to shop online. Another thing; the two entrepreneurs, Sachin and Binny Bansal, did right was
1

Taken From http://www.livemint.com/Companies/pbOfYVBQigpqm1D2FguQDO/Flipkart-raises-160-millionin-another-round-of-funding.html

that they started off with books a low capital investment and a fast turn-around time. But the best thing they did was that they understood that to be successful in India, you need to be the God of Distribution. In India, its amazing Logistics that prove to be the game-changer and thats exactly what the folks at Flipkart have done. Table 1 - Strength Weakness Oppourtunity Threat(SWOT) Analysis

SWOT Strengths INTERNAL FACTORS Brand

HELPFUL Weaknesses Delivery

HARMFUL

Supply Chain Management Quick Turnaround Time Strategic Acquisitions Huge Reach Opportunities

Internet Penetration Payment Gateways Higher Costs

Advertisement And Promotion

Threats New Players Such As Amazon

EXTERNAL FACTORS

Growth In E-Tail Growth In E-Book Culture Broadband Penetration Mobile Apps

Next we need to see the Challenges Faced By Flipkart Initially when they started out, it wasnt easy for them to earn the trust of the customer. Handling customer complaints, without having a face to their customer service proves to be bit of a challenge at times. Not having the display advantage, the browsing feature and not being able to carry out promotional activities are some other obvious challenges. The discomfort of paying by cards, on account of security issues is another challenge. They had tried to address that by introducing the cash-on-delivery option. The fact that highest number of orders and sales get registered during weekends proves to be tough at times for logistics and customer service. The fact that they have to work 24/7 and the customer perceptions around it also bring some difficulty. For example, the customer places an order at 12 am and counts the number of hours for delivery right from then! What made them stand out from all those people out there? -

The procurement model is at the heart of Flipkarts success, as most delays or troubles occur in this part of business. Flipkart employed consignment model i.e. procurement based on demand. It is the robust logistics at Flipkart that sets it apart from other e-commerce sites. An amazingly well-oiled warehousing and delivery system. They offer a huge range of titles more than 17 million which really sets them apart from the rest of the crowd. Marketing Strategies which worked to their benefit Table 2 - Customer Oriented Model Of Flipkart.com

MARKETING MIX Cost Heavy discounts on books Free shipping for purchases above Rs. 500 Consumer Availability of products across 16 categories Books can be ordered before they are launched Pan India presence Communication Advertisements via Search Engine Optimization Transparent Communication Once the customer places an order, progress can be tracked Flipkart has been mostly marketed by word of mouth advertising. Customer satisfaction has been their best marketing medium. Flipkart very wisely used SEO (Search Engine Optimization) and Google Ad-words as the marketing tools to have a far reach in the online world. Flipkart.com official Facebook page has close to 19 lac 'likes'. Flipkart recently launched a series of 3 ads with the tag line - "No Kidding No worries". Kids were used to create the adverts to send out the message - if a kid can do it, you can also do it. All in all to create a great customer experience. Flipkarts Success mantra Great customer service - Flipkart users are more satisfied than that of their competitors. Great customer service has been its hallmark. Easy to use website, hassle free payment system The user interface is sleek and easy to use. Cash on delivery/Card on delivery mode of Convenience Ease of finding the product and related information Purchase at the click of a button Cash/ Card on Delivery

payment - This has been a major instrument in Flipkarts success. Almost 60% of its sales happen through this mode. Cash on delivery created trust in the minds of Indian customers who were always weary of making payments online. Focused on user experience - Every other e-commerce site, tried to cram the maximum of amount of information possible into every single page whereas Flipkart focused on providing only the relevant info. Hiring or rather right hiring is one of the critical factors contributing to a startups success, so some of the key criteria that the Flipkart team looks at while hiring are - They typically dont look at specialists to come on board rather they look out for generalists with the attitude to learn and adapt to the fast pace of growth. Everyone in the team on a collective and individual level needs to have a high sense of ownership. This is something which clearly differentiates a high performing organization from the others. Hiring process is the best brand campaign for any organization Transparency in hiring is one of the best ways to attract the right kind of talent. Flipkart has added a prepaid Wallet feature to its e-commerce platform that allows shoppers to store money on the site and use it to purchase items, without having to reach for their credit card for each transaction. There are no major foreseeable threats in the future. The company has built a great brand name, they just have to maintain and enhance the same. Need to keep introducing more products, adapting to the changing needs of the customer with time. The entry of Amazon.com in 2012 in the Indian e-commerce space has been cited as a big challenge to Flipkart. However I think that Flipkart is a respected Brand name in India and should be able to compete with Amazon.We should Remember Amazon being a very big company can bring in serious competition to Flipkart, since Amazon can bear more losses in the beginning to gain customer base. But again Indian market is growing at a rapid pace as access to internet increases and people become more aware of e-commerce sites and start trusting the same. Hence Indian market is sufficiently big at-least for these two giants to co-exist beneficially. Flipkart aims at 10 times growth and eyes at $ 1Billion sales by 2015. They will look at bigger investments in their supply chain and technology. Investment will be made in large warehouses and increased automation of their process, so that the product is not delayed. They intend to enter in to various new categories and expand their current categories as well. Everything except for groceries and automobiles will be available on Flipkart in future. To go

further in the value chain, Flipkart is looking at associations with a larger number of suppliers and partners, both nationally and internationally. Flipkart, the first billion dollar Online Company from India (going by 2015 estimates) is by far the leading online store in the nation. Now that Amazon is reportedly entering India in early 2014, this news becomes even more significant, considering that Amazon has previously, and unsuccessfully, tried acquiring the company, with Flipkart demanding a very high buyout price. With online retail industry in India pegged to reach $1.5 billion (2015), sources suggest that e-commerce is just emerging up in India and we may soon see many more Internet companies achieving similar success.

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