CONTENTS INTRODUCTION TO ONLINE MARKETING THE HISTORY OF ONLINE MARKETING TYPES OF ONLINE MARKETING TECHNOLOGIES OF ONLINE MARKETING ‘ADVANTAGES OF ONLINE MARKETING DISADVANTAGES OF ONLINE MARKETING REVIEW OFLITERATURE & RESEARCH DESIGN 2.1 | REVIEW OF LITERATURE 2.2 | RESEARCH OF METHODOLOGY 3 PROFILE OF FLIPKART 16-28 3.1 | HISTORY 3.2 | JOURNEY OF FLIPKART of 3.3 | FLIPKART'S INVENTORY MANAGEMENT 4 DATA ANALYSIS AND DISCUSSIONS 29-45 4.1 | INTERVIEWEE’S RESPONSES 4.2 | CONSOLIDATED INCOME STATEMENT 4.3 | CONSOLIDATED BALANCE SHEET 4.4 | KEY RATIOS s 5.1 | FINDINGS 46-49 5.2 | RECOMMENDATIONS 5.3 | CONCLUSION BIBLIOGRAPHY 50 g SEAS EOS RS Ra SEE Ee Ee aCHAPTER -1 Introduction1.1 THE HISTORY OF ONLINE MARKET By definition, ecommerce or electronic commerce, is the buying and selling of products or services via the Intemet, Nowadays the thought of living without ecommerce seems unfathomable, complicated and an inconvenience to many. It wasn’t until only a few decades ago that the idea of ecommerce had even appeared. Ecommerce was introduced 40 years ago and, to this day, continues to grow with new technologies, innovations, and thousands of businesses entering the online market each year. The convenience, safety, and user experience of ecommerce has improved exponentially since its inception in the 1970°s, This article will address some of the key players and milestones of ecommerce. ONLINE MARKET Timeline 1960-1982 Paving the way for electric commerce was.the development of the Electronic Data Interchange (EDD). EDI replaced tradi from one computer to another. nal mailing and faxing of documents with a digital transfer of data Trading partners could transfer orders, invoices and other business transactions using a data format that met the ANSI ASC X12, the predominant set of standards in North America. Once an order is sent, it is then examined by a VAN (Value-Added Network) and finally directed to the recipient’s order processing system. EDI allowed the transfer of data seamlessly without any human intervention. Michael Aldrich, an English inventor, innovator and entrepreneur is credited with developing the predecessor to online shopping. The idea came about during a stroll with his wife and Labrador when Aldrich lamented about their weekly supermarket shopping expedition. This conversation sparked an idea to hook a television to their supermarket to deliver the groceries. Immediately after the discussion Aldrich quickly planned and implemented his idea In 1979 Aldrich connected a television set to a transaction processing computer with a telephone line and created what he coined, “teleshopping,” meaning shopping at a distance.1982-1990 It was apparent from the beginning that B2B online shopping would be commercially lucrative but B2C would not be successful until the later widespread use of PC’s and the World Wide Web, also known as, the Internet. In 1982, France launched the precursor to the Internet called, Minitel The online service used a Videotext terminal machine that was accessed through telephone lines, The Minitel was free to telephone subscribers and connected millions of users to a computing network By 1999, over 9 million Minitel terminals had been distributed and were connecting approximately 25 million users in this interconnected network of machines. The Minitel system peaked in 1991 and slowly met its demise after the success of the Internet 3 years later. Eventually, in 2011, France Telecom announced its shutdown of the Minitel service system. Sadly, it had not become what it had hoped to be, the Internet. 90's To Present In 1990 Tim Berners Lee, along with his friend Robert Cailliau, published a proposal to build a “Hypertext project” called, “World Wide Web.” The inspiration for this project was modeled after the Dynatex SGML reader licensed by CERN That same year, Lee, using a NEXT computer created the first web server and wrote the first web browser. Shortly thereafter, he went on to debut the web on Aug. 6, 1991 as a publicly available service on the Internet, When Berner’s Lee decided he would take on the task of marrying hypertext to the Internet, in doing that, the process led to him developing URL, HTML and HTTP. When the National Science Foundation lifted its restrictions on commercial use of the NET in 1991, the Internet and online shopping saw remarkable growth. In September 1995, the NSF began charging a fee for registering domain names. 120,000 registered domain names were present at that time and within 3 years that number grew to beyond 2 million. By this time, NSF's role in the Internet came to an end and a lot of the oversight shifted to the commercial sector.The 1992 book, Future Shop: How Technologies Will Change The Way We Shop And What ‘ism. An overview of the We Buy, provided insight and predictions on the future of consum book explains: For hundreds of years the marketplace has been growing more complex and more confusing for consumers to navigate. Published in 1992, long before the Internet became a household word. Future Shop argued that new information technologies, combined with innovative public policies, could help consumers overcome that confusion. A prescient manifesto of the coming revolution in e-commerce, Future Shop’s vision of consumer empowerment still resonates today. From the beginning, there were many hesitations and concerns with online shopping but the development of a security protocol ~ the Secure Socket Layers (SSL) — encryption certificate by Netscape in 1994 provided a safe means to transmit data over the Internet. Web browsers were able to check and identify whether a site had an authenticated SSL certificate and based on that, could determine whether or not a site could be trusted. Now, SSL encryption protocol is a vital part of web security and version 3.0 has become the standard for most web servers today. 1.2 There are 6 basic types of e-commerce: 1, Business-to-Business (B2B) Business-to-Consumer (B2C) ‘Consumer-to-Consumer (C2C) ‘Consumer-to-Business (C2B). Business-to-Administration (B2A) aun en ‘Consumer-to-Administration (C2A) 1. Business-to-Business (B2B) Business-to-Business (B2B) e-commerce encompasses all electronic transactions of goods or services conducted between companies. Producers and traditional commerce wholesalers typically operate with this type of electronic commerce.2. Business-to-Consumer (B2C) ‘The Business-to-Consumer type of e-commerce is distinguished by the establishment of electronic business relationships between businesses and final consumers. It corresponds to the retail section of e-commerce, where traditional retail trade normally operates. These types of relationships can be easier and more dynamic, but also more sporadic or discontinued. This type of commerce has developed greatly, due to the advent of the web, and there are already many virtual stores and malls on the Internet, which sell all kinds of consumer goods, such as computers, software, books, shoes, cars, food, financial products, digital publications, etc When compared to buying retail in traditional commerce, the consumer usually has more information available in terms of informative content and there is also a widespread idea that you'll be buying cheaper, without jeopardizing an equally personalized customer service, as well as ensuring quick processing and delivery of your order.3. Consumer-to-Consumer (C2C) Consumer-to-Consumer (C2C) type e-commerce encompasses all electronic transactions of ‘goods or services conducted between consumers. Generally, these transactions are conducted through a third party, which provides the online platform where the transactions are actually carried out. Places advertisement Figure: C2C Model 4. Consumer-to-Business (C2B) In C2B there is a complete reversal of the traditional sense of exchanging goods. This type of e- commerce is very common in crowdsourcing based projects. A large number of individuals make their services or products available for purchase for companies seeking precisely these types of services or products.Examples of such practices are the sites where designers present several proposals for a company logo and where only one of them is selected and effectively purchased. Another platform that is very common in this type of commerce are the markets that sell royalty-free photographs, images, media and design elements, such as iStockphoto. Places money for particular service Processes Order receives products Receives money 5, Business-to-Administration (B2A) This part of e-commerce encompasses all transactions conducted online between companies and public administration. This is an area that involves a large amount and a variety of services, particularly in areas such as fiscal, social security, employment, legal documents and registers, etc. These types of services have increased considerably in recent years with investments made in e-government. 6. Consumer-to-Administration (C2A) The Consumer-to-Administration model encompasses all electronic transactions conducted between individuals and public administration. Examples of applications include: + Education — disseminating information, distance learning, ete. + Social Security ~ through the distribution of information, making payments, etc + Taxes ~ filing tax returns, payments, etc. + Health — appointments, information about Both models involving Public Administration (B2A and C2A) are strongly associated to the idea of efficiency and easy usability of the services provided to citizens by the government, Inesses, payment of health services, etc. with the support of information and communication technologies.1.3 TECHNOLOGIES OF E-COMMERCE, While many technologies can fit within the defini commerce," the most important are: + Electronic data interchange (EDI) + Barcodes + Electronic mail + Internet © World Wide Web + Product data exchange + Electronic forms Electronic Data Interchange (EDI) EDI is the computer-to-computer exchange of structured business information in a standard electronic format. Information stored on one computer is translated by software programs into standard EDI format for transmission to one or more trading partners. The trading partners’ computers, in turn, translate the formation using software programs into a form they can understand. Bar Codes Bar codes are used for automatic product identification by a computer. They are a rectangular pattern of lines of varying widths and spaces. Specific characters (e.g. numbers 0-9) are assigned unique patterns, thus creating a "font" which computers can recognize based on light reflected from a laser The most obvious example of bar codes is on consumer products such as packaged foods. These codes allow the products to be scanned at the checkout counter. As the product is identified the price is entered in the cash register, while internal systems such as inventory and accounting are automatically updated. The special value of a bar code is that objects can be identified at any point where a stationary or hand held laser scanner could be employed. Thus the technology carries tremendous potential to improve any process requiring tight control of material flow. Good examples would be shipping, inventory management, and work flow in discrete parts manufacturing, Electronic Mail Messages composed by an individual and sent in digital form to other recipients via the Internet. InternetThe Interné is a decentralized global network of millions of diverse computers and computer networks, These networks can all "talk" to each other because they have agreed to use a common communications protocol called TCP/IP. The Internet is a tool for communications between people and businesses. The network is growing very, very fast and as more and more people are gaining access to the Internet, it is becoming more and more usefil World Wide Web The World Wide Web is a collection of documents written and encoded with the Hypertext Markup Language (HTML). With the aid of a relatively small piece of software (called a "browser"), a user can ask for these documents and display them on the user's local computer, although the document can be on a computer on a totally different network elsewhere in the world, HTML documents (or "pages," as they are called) can contain many different kinds of information such as text, pictures, video, sound, and pointers, which take users immediately to other web pages. Because Web pages are continually available through the Internet, these pointers may call up pages from anywhere-in the world. Itis this ability to jump from site to site that gave rise to the term "World Wide Web." Browsing the Web (or "surfing the Net") can be a fascinating activity, especially to people new to the Internet, The World Wide Web is by far the ‘most heavily used application on the Internet, Product Data Exchange Product data refers to any data that is needed to describe a product. Sometimes that data is in graphical form, as in the case of pictures, drawings and CAD files, In other cases the data may be character based (numbers and letters), as in the case of specifications, bills of material, manufacturing instructions, engineering change notices and test results Product data exchange differs from other types of business communications in two important ways. First, because graphics are involved users must contend with large computer files and with problems of compatibility between software applications. (The difficulty of exchanging CAD files from one system to another is legendary.) Second, version control very quickly gets very complicated. Product designs, even late in the development cycle, are subject to a great deal of change, and because manufacturing processes are involved, even small product changes can have major consequences for getting a product into production, Electronic Forms Electronic forms are a technology that combines the familiarity of paper forms with the power of storing information in digital form. Imagine an ordinary paper form, a piece of paper with lines, boxes, check-off lists, and places for signatures, To the user an electronic form is simply a digital analogue of such a paper form, an image, which looks like a form but which appears on a 9computer screen and is filled out via mouse, and keyboard. Behind the screen, however, lie numerous functions that paper and pencil cannot provide. Those extra functions come about because the data from electronic forms are captured in digital form, thus allowing storage in data bases, automatic information routing, and integration into other applications. SYSTEMS OF PAYMENTS IN ONLINE MARKET E-commerce is rife with buzzwords and catchphrases. Here are some of the current terms people like to throw around Credit card-based If consumers want to purchase a product or service, they simply send their credit card details to the service provider involved and the credit card organization will handle this payment like any other. Smart cards These are credit and debit cards and other card products enhanced with microprocessors capable of holding more information than the traditional magnetic stripe. The chip can store significantly greater amounts of data, estimated to be 80 times more than a magnetic stripe. Smart cards are basically of two types Relationship based smart credit cards: This is an enhancement of existing card services and/or the addition of new services that a financial institution delivers to its customers via a chip-based card or other device. These new services may include access to multiple financial accounts, value-added marketing programs, or other information cardholders may want to store on their card Electronic Purses: These are wallet-sized smart cards embedded with programmable microchips that store sums of money for people to use instead of cash for everything from buying food to paying subway fares. Digital or electronic cash Also called e-cash, these terms refer to any of several schemes that allow a person to pay for ‘goods or services by transmitting a number from one computer to another. The numbers, just like those on a dollar bill, are issued by a bank and represent specified sums of real money. One of the key features of digital cash is that it's anonymous and reusable, just like real cash. This is akey difference between e-cash and credit card transactions over the Internet, Electronic checks Currently being tested by Cyber cash, electronic checking systems such as PayNow take money from users’ checking accounts to pay utility and phone bills. 10Electronic wallet This is a payment scheme, such as Cyber cash’s Internet Wallet, that stores your credit card numbers on your hard drive in an encrypted form. You can then make purchases at Web sites, that support that particular electronic wallet. When you go to a participating online store, you click a Pay button to initiate a credit card payment via a secure transaction enabled by the electronic wallet company’s server. The major browser vendors have struck deals to include electronic wallet technology in their products. Transactions in amounts between 25 cents and $10, typically made in order to download or access graphics, games, and information, are known as micropayments. Pay-as-you-go micropayments were supposed to revolutionize the world of E-commerce 1.4Advantages of Online Market © It provides 24/7 Hour service to thé consumer. © Consumers have a much wider choice available on online stores. © Ittakes Low cost for advertising the products * Itis easy to create and maintain customer or client © It saves time required for shopping and reduces unwanted expenses like traveling, E-Commerce reduces the unwanted paper work © Easy to start and manage a business © In E-Commerce there is no need of physical company set-ups © Customers can easily select the product from different provider without moving around physically, © Consumers can compare product, feature, price and even look up for reviews before purchasing the product. It takes Low operational costs and provides better quality of se \dvantages of Online Market * There is no guarantee of product quality It may take time for the delivery of products ‘© Users can not touch or feel the products during online shopping © There can be lack of system security and reliability, ‘© Mechanical failures can cause unpredictable effect on the total process. ‘© Internet is expensive but still e-commerce cannot be accessed without it, a‘Any good or bad person can easily start a business and there are a number of bad sites which only stand for customer's money. Write a short note on E-commerce models. E-commerce is commonly known as electronic marketing It deals with buying and selling of products, information, and services over Internet. It can also be defined as a use of computing and communication technologies in financial business, online airline reservation, order processing, inventory management ete, E-commerce refers to Internet market which includes manufacturing, development, marketing, sales and support, ete 22.1 Introduction There has been a lot of media coverage on E-Commerce in recent years. However, the concept of E-Commerce is still unclear to many people due to its newness. For business executives, itis even more mysterious since there are no proven business models for generating profits Conducting research in the E-Commerce area reveals a few dominant trends: + E-Commerce revenues will grow explosively. + E-Commerce is crucial for business survival. + E-Commerce decisions are complex. + Consulting firms are experiencing rapid declines in key practice areas The implications for these trends are as follows + Organizations feel the need for expert advice. + E-Commerce is the new business opportunity for consulting firms. + Consulting firms need structured, proven, E-Commerce methodologies. + These trends and implications are the driving forces for the project. 22 RESEARCH METHODOLOGY Research Design Research means different things to different people! and the intention behind it are to investigate innumerable data, theories, experiences, concepts and law. The procedural framework within which the research is conducted! is the definition of research methodology. The two broad and distinct approaches to social research cover the Quantitative and Qualitative methods of enquiry. The quantitative paradigm on the other hand intends to ‘gain a deeper understanding, knowledge and insight into a particular situation or phenomenon, by providing answers to questions of how? rather than _what?*. Unlike qualitative research which occurs in natural settings, quantitative research is where hypotheses are established BCHAPTER - 2 4 Profiles of FlipkartSflipkart.., aa ata Tae Flipkart is an electronic commerce company headquartered in Bangalore, Karnataka, It was founded in 2007 by Sachin Bansal and Binny Bansal. The company is registered in Singapore. Flipkart has launched its own product range under the name "DigiFlip" with products including tablets, USBs, and laptop bags. According to Morgan Stanley the current market value of Flipkart is $5.54 billion as of November 2016 8. B, (Ravi) Pandit Chairman & Group CEO Kishor Patil CEO & Managing Director Sachin Tikekar President & Board Member Pawan Sharma CEO — Solutions and Services Pankaj Sathe Chief Marketing Officer ‘Anup Sable Chief Technology Officer Anil Patwardhan Chief Financial Officer Abhishek Sinha Chief People and Operations Officer 3.1HISTORY Flipkart was founded in 2007 by Sachin Bansal and Binny Bansal, both alumni of the Indian Institute of Technology Delhi. They worked for Amazon.com, and left to create their new ‘company incorporated in October 2007 as Flipkart Online Services Pvt. Ltd. The first product they sold was the book Leaving Microsofi To Change The Worldto a customer from Hyderabad. Flipkart now employs more than 33,000 people. After the success of its 2014 Big Billion Sale, Flipkart carried out a second Big Billion 15Sale, where it is reported that they saw a business turnover of $300 million in gross merchandise volume. Business Structure In a report dated 25 November 2014, a leading media outlet reported that Flipkart were operating through a complex business structure which included nine firms, some registered in Singapore and some in India. In 2012 Flipkart co-founders sold WS Retail to a consortium of investors led by Rajeev Kuchhal Flipkart presents an interesting story of Indian entrepreneurship. A company started by two IIT D graduates, Sachin Bansal and Binny Bansal, has become synonyms of e-commerce in Indian Market. How did it happen? Before discussing this, let me show you a brief timeline of Flipkart history. Flipkart started by selling books and in stages they have expanded to include almost everything under the sun. Looking at their milestones provide a good insight for entrepreneurs on how to establish their business, Let’s split the flipkart story in different parts to understand what made flipkart India’s Amazon * Small and focused start They started by selling books, which required small initial budget. Since they were new in market and had no money for advertisement, they relied on word of mouth publicity. And, for having an effective word of mouth they kept the prices as low as possible. Now, people were «getting books at lower prices without taking pain of going to bookstores Surprise customer through fast delivery From starting Flipkart distinguished itself with other competitors by having a super-fast delivery, Many times, people ordered book and it reached next day itself, Indian consumer habituated of late delivery in everything found it pleasantly surprising and went on a publicity spree for flipkart. Keep on growing If we see flipkart’s timeline, they expanded their product category every year after reaching break even. They were already getting a huge no. of page views daily. Increasing product category ensured a 100% increase in revenue every quarter. 16Cash on delivery and Cash on Card " y | ‘ p This was one of the most innovative and bold step taken by flipkart, People in India were still skeptical about paying online. Getting things without advance payment delighted customers, They can be more casual in ordering now. In case they don’t like a product or find any defect, they can cancel the order with zero risk. People without credit or debit card can also order. It made online shopping affordable to everybody, which was a luxury earlier. Range of Product 7 Flipkart boasts of having around 11.5 million book titles available in their catalogue. It has almost all the brands available for other products as well. It is having around | million tracks of 55 different genres in its music store. This fulfils customer's stated ,unstated and latent wants as well Organizational Structure Flipkart has focused equally in both operation and Technology. Below is the top view of its Organization structure Till now, it has been a great ride for flipkart, It is growing with a rate of 100% every quarter. This has resulted in significant increase in operational cost, On the operational front, company is facing issues pertaining to delay in delivery or getting faulty products delivered. It faces significant challenge in reverse logistics. It’s a big task to track unsuccessful orders, which are quite costly to track. Flipkart is planning of bigger investments in supply chain and technology to enable large warehouse and increase process automation. Flipkart is also facing huge losses due to cash on delivery for mainly two reasons, 1 st it makes cash flow routed through courier companies, who charges a hefty amount and 2 nd there are more rejected orders due to customer fickle mindedness. Recently, flipkart bought letsbuy.com for $25 million. This all has made getting a good funding source essential for flipkart, At the same time Bansal are having more than 30% of flipkart’s shares, so they have very little to offer for new investors, Recently, Bansals failed to get funding from General Atlantic . They have not been able to get any big 7investor apart from their first investor Accel India. With bigger players coming in the market, increasing cost of operation and chipping in profit margins, it will be a tough road ahead for flipkart 3.2JOURNEY OF FLIPKART Flipkart, a company which started with a mere investment of Rs. 4, 00,000 to develop its website, has undoubtedly grown up to be one of the biggest e-commerce players in the Indian peninsula, In this fast pacing world, shortage of time is big crisis and acts as a big push for consumers to shop online, In this article, we will venture into how the company grew in such a short span of time, Also, Techstory would give you insights into history and future prospects of the company. Flipkart was founded by Mr. Sachin Bansal and Binny Bansal, alumni of Indian Institute of Technology Delhi, in October 2007. In its initial phase of operation, Flipkart was registered as Flipkart Online Services Pvt, Ltd and sold only books. Co-Founder of Flipkart and achiever of Entrepreneur of the Year Award 2012-2013 from Economic Times, Mr. Sachin in an interview acknowledged that how he thought founding the company was most ridiculous thing he has ever done and how others around him thought he was insane doing so. Soon, the company grew bigger and ventured into selling other products such as electronic goods, e- books, stationery supplies, fashion and life style products as well. As more and ore consumers turned to Flipkart for shopping, investors turned to Flipkart to support the company’s future strategy. The company raised US$1 million in 2009 from venture 18capital funds Accel India, and later on US$IO million in 2010 and US$20 million in June 2011 from Tiger Global. But company took everyone by surprise when it announced that it raised $1 billion from already existing investors including Tiger Global Management LLC, Accel Partners, and Morgan Stanley Investment Management and a new investor Singapore sovereign-wealth fund GIC. New York-based private equity company Tiger Global Management LLC is the largest investor in the company today. Till today, the company has privately raised about $2.7 billion in multiple rounds of funding, Flipkart also grew via acquisition. The company acquired many firms such as ‘WeRead’ in 2010, Mime360 and Chakpak.com in 2011, Letsbuy.com in 2012 and then myntra.com ( India’s largest online apparel store) in 2014 AB SIRF Mea oe “ ~ ae eeu i og However, the idea of Flipkart (online retailer) was not something unique as e-commerce was booming everywhere and there were several companies operating in this domain. Then what pegs Flipkart above other firms? Well! Sachin believes that ‘quality of the service provided’ is what sets Flipkart apart from other ventures like theirs. What differentiates them and paves their way to success is excellent quality of service being provided by them at which their competitors have lagged behind. To add to list, availability of all sorts of goods of various categories, enhanced online shopping experience, pre as well as post sales experience, are the company’s key differentiators. The bigger you grow, tougher the challenges you face and harder it becomes to overcome them. The same falls in line for Flipkart. In its early stage, two major challenge encountered were to get book vendors on board with Flipkart as it didn’t have a book store and then to obtain the approval for an online based credit card payment gateway. The founders however faced every challenge headon ! Sachin recalls how he and Binny used to stand outside Gangaram Book Stores, Banglore and hand over Flipkart bookmarks to only those who were coming out with books in hands; to ensure that their target was correct. They had to make 19several assumptions and start slowly by building good business relations with consumers and suppliers. Sometimes these assumptions would turn out to be wrong and they would need to change the direction. But every time they committed a mistake, it taught them a lesson. pis human, Flipkart hit GVM of $1 billion in March 2014. GVM is the value of good sold or gross merchandise value and is calculated on monthly average sales. Currently the value of good sold or gross merchandise value (GMV) on Flipkart is $4 billion. The company has set the target to reach a GVM of $8 billion, add 100,000 sellers on its platform and sell 25 million products per month by the end of this year, The company is also said to have set a target of selling 1 billion ‘goods ina year by the end of 2017. In 2014, the company reported that it had 15,000 employees working for them. Currently with massive increase in Flipkart’s user base, maintaining a good user experience is a major challenged posed to company. Flipkart has adopted the strategy to invest a significant portion of its raised fund into supply chain efficiency, building a better talent pool and technology innovation. Moreover, taking logistics to all terrains within country including towns and villages, making payment gateway options secure and easy for the consumers are other major challenges. By mid 2016, Flipkart is planning to raise a minimum of USD 5 billion through an Initial Public Offering (IPO) listing in New York Stock Exchange (NYSE). This will be the largest public offer by any Indian business till date and will value the company at over USD 30 billion. Be it selling products worth Rs. 650 Crore on ‘The Big Billion Day’ or exclusive tie-ups with companies such as Motorola Mobility and Xiaomi Tech, 20the company stands for converting every challenge into an opportunity. On the brighter aspect, with such a huge amount of raised funds and consumer base, there lies a potential of India producing a $100 billion company, one of the most difficult task ever but possible. Sachin ‘wants Flipkart to be that company. The aim is set and next step is to deploy strategies to achieve the same. Techstory wishes success to Flipkart! larch pts aon ite Facey Emini | Ml ; beans Cetera OZ ged) ‘Mrelcniton Lat Chose 1 oboe ened lorie i ‘andes sept sae sso ia es Hoes Seas 4 andNis Fate Deis 4 » = cai fibey my Deliey—FRgaconent 4 Fd a le ra FINANCE Initially, they had spent 400,000 (US$5,900) only for making the website to set up the business. Flipkart has later raised funding from venture capital funds Accel India ($1 million in 2009) and Tiger Global ($10 million in 2010 and $20 million in June 2011). On 24 August 2012, Flipkart announced the completion of its 4th round of $150 million funding from MIH (part of Naspers Group) and ICONIQ Capital. The company announced, on 10 July 2013, that it has raised an additional $200 million from existing investors including Tiger Global, Naspers, Accel Partners and Iconiq Capital. Flipkart's reported sales were (140 million (US$590,000) in FY 2008-2009, 1200 million (USS3.0 million) in FY 2009— 2010 and 2750 million (USS11 million) for FY 2010-2011. In FY 2011-2012, Flipkart is set to cross the 15 billion (US$74 million) mark as Internet usage in the country increases and people get accustomed to making purchases online, Flipkart projects its sales to reach 110 billion (US$150 million) by year 2014. On average, Flipkart sells nearly 10 products. per 21‘minute and is aiming at generating a revenue of “150 billion (US$740 million) by 2015. On November 2012, Flipkart became one of the companies being probed for alleged violations of FDI regulations of the Foreign Exchange Management Act, 1999 Flipkart reported a loss of 32.81 billion (US$42 million) for the FY 2012-13. In July 2013, Flipkart raised $160 million from private equity investors. In October 2013, it was reported that Flipkart had raised an additional $160 million from new investors Dragoneer Investment Group, Morgan Stanley Wealth Management, Sofina SA and Vulean Inc. with participation from existing investor Tiger Global. On 26 May 2014, Flipkart announced that it has raised $210 million from Yuri Milner’s DST Global and its existing investors Tiger Global, Naspers and Iconiq Capital In early July 2014, it was also highly speculated that Flipkart was in negotiations to raise at least $500 million, for a likely listing in the US for 2016. On 29 July 2014, Flipkart announced that it raised $1 billion‘ from Tiger Global Management LLC, Accel Partners, and Morgan Stanley Investment Management and a new investor Singapore sovereign-wealth fund GIC On 6 October 2014, Flipkart sold products worth 6.5 billion (US$97 million) in 10 hours in a special one-day event ~ "The Big Billion Day", claiming they had created e-commerce history, but their hard-won reputation for good customer service suffered because of technical problems, and angry reactions on social media from buyers disappointed with the pricing and availability of products. It claimed to sell a whopping $00,000 mobile handsets, $00,000 clothes and shoes and 25,000 television sets within hours of opening its discounted sale at 8 AM. In December 2014, After it received $700 million from another funding, Flipkart had a market cap of $11 billion. In May 2015 Flipkart has raised $550 million from some of its existing investors, in a deal that raises the valuation of the privately held Indian startup to about $15 billion. On 20 December 2014, Flipkart announced filing application with Singapore-based companies’ regulator ACRA to become a public company after raising $700 million for long term strategic investments in India following which its number of investors exceeded 50. The $700 million fund raised by Flipkart added new investors—Baillie Gifford, Greenoaks Capital, Steadview Capital, T. Rowe Price Associates and Qatar Investment Authority—on company's board Its 22‘existing investors DST Global, GIC, ICONTQ Capital and Tiger Global also participated in this latest financing round By August 2015, after raising $700 million, Flipkart had already raised a total of $3 billion, over 12 rounds and 16 investors REGULATORY ACTION AND LAWSUITS The Government Of India informed the parliament in 2012, that it had asked the Enforcement Directorate to investigate Flipkart Online Services. In August 2014, the Enforcement Directorate claimed that it had found Flipkart to be in violation of the Foreign Exchange Management Act On 30 November 2012, Flipkarts offices were raided by the Enforcement Directorate. Documents and computer hard drives were seized by the regulatory agency. Delhi High Court observed violation of foreign investment regulations by E-Commerce firms including Flipkart In January 2016, a public interest litigation came up for hearing which alleges Flipkart of contravention of foreign investment norms. The court asked the Reserve Bank of India to provide the latest circular on foreign investment policy, In January 2016, the Department of Industrial Policy and Promotion (DIPP) clarified that it does not recognize the marketplace model of online retail, In February 2016, Health Minister, J P Nadda, informed that the Maharashtra FDA had taken action against Flipkart, among others, for selling drugs without valid license. FLIPKART'S INVENTORY MANAGEMENT. Flipkart is an electronic commerce company and among India’s largest online retailers with reported sales of $12.Smillion. Flipkart initially started with selling books online but has diversified today into a generic e-commerce website, selling CDs/DVDs, mobile phones and electronics. The mission of the organization is to provide a memorable online shopping experience to the customers so that they come back again and they use innovative services like 30 day replacement, Cash on Delivery, free shipping, EMI options mainly for electronics and on-time delivery. 23Company Structure: Perierrternirg Peet aa ‘Website Management ‘Vendor Management Procure! ERP System Sales Management Warehouse Logistics Customer Support | The operations team deals with Supply chain management; from procurement to warehouse ‘management and customer support. SUPPLIER NETWORK. Flipkart has a network of 500 plus distributors and only stocks frequently ordered items. Items with low demand elasticity, fast selling items which have a long shelf life are maintained in inventory. Whereas items with low and unpredictable demand are procured once the customers places the order. WAREHOUSE MANAGEMENT: Flipkart has & major warehouse spread across the Metros like Mumbai, Delhi, Kolkata and Chennai and in the cities of Pune, Bangalore and Noida. They further have smaller regional distribution centers at over S00 locations. Company has tie-ups with more than 15 courier companies like Blue Dart, First Flight ete. to deliver their products and Indian post for areas where courier do not reach Flipkart’s warehouse management has 3 major steps: . Inward Processing + Storage Management + Outward Processing 24Flipkart’s Warehouse Management Order Fulfillment Process: Customer orders are filled via Inventory Management ot Just in time delivery depending on the availability of products Order Placed by customer Inventory Check at Local ‘ Warehouse Ye ves * + | Inventory Check at other warehouses ee : No RPT JN Procurement trom local Vendors customer livery Receipt and Cash Settlements 25Inventory Management: Flipkart uses a Continuous review model. The inventory stocks are replenished when the inventory levels reach Reorder point (ROP). The company employs first in first out(FIFO) method for its inventory management. Under the FIFO method, shipment request is sent to a particular warehouse where the oldest inventory items are shipped first. This model makes sense for electronics since technology becomes obsolete very quickly. Flipkart uses sales to predict the levels of inventory. The warehouses are divided into multiple parts such as inventory, packaging, shipping etc. Stocks are replenished every 24-48 hours and in the back end the company records details of all the transactions. The company has partnered with postal companies for order tracking and reconcilation, Thus the customer is updated about the state of his order via email, website or text messages. If the product needs to be returned, it is done effectively and efficiently due to the companies partnership with the courier companies. In the case of electronics, warranty arid after sales service is solely the manufacturer’s responsibility but Flipkart facilitates interaction between supplier and customer. With increased penetration of internet services, the e-commerce business in India is forecasted to increase from 11 million customers to 30 million by 2015. Seeing the prospects for growth, several new companies are going to enter the e-commerce market and a price war is unavoidable. Thus in order to stay profitable in this growing competition, companies will have to focus dramatically on reducing their costs and this can be achieved by maintaining an efficient backend- nationwide delivery network, warehouses, inventory management, logistics te. and thus the importance of managing one’s supply chain should not be undermined. 26CHAPTER - 4 DATA INTERPENETRATION4.1 INTERVIEWEE’S RESPONSES This chapter aims obtain the objective of the study by critically analysing the qualitative data through thoroughly examining the interviewee's responses and belief’. This has been achieved through evaluating the most relevant responses by the participants. The data has been analysed and discussed by comparing the comments made by the respondents with theliterature review keeping in mind the research objective of the study. Thus, the rationale of this analysis is based on the personal answers provided by the respondents. ‘An appropriately designed questionnaire was used to collect the primary data for the study. The data for 100 respondents was organized systematically in tables and graphs and then was subjected to analysis using appropriate statistical tools, The results of the analysis are presented in the following section in order to assess the customer perception towards onlines hopping on Flipkart.com in India. Here for analysing, we are considering two factors. That is © Demographical factors © Behavioural factors 1.GENDER WISE RESPONDENTS interviewee's responses Male Female Total Responses 38 a 100 Percentage 58 42 100 28mate sfemate Analysis and Interpretatis According to demography profile, in this study 58 % male and 42% female respondents are part of my target population and they help me to fulfil my questionnaire from different area of BERHAMPUR city. From these groups total respondents are 100. So, according to the survey result, the male respondents are more and can be told that they interested to shop online than female, even though both of them shop online. 2.AGE WISE RESPONDENTS [ Age 15-25 25-35 35-45 45 &above | Total | | | No. of respondent | 63 24 12 1 100 | Percentage 63 24 12 1 | 100 29Graph 4.3: Occupation wise respondents Occupation Analysis and Interpret: Below figure shows that 63% respondents are between 15-25 years old, 24% respondents are between 25-35 years old, 12% respondents between 35-45 years old, and 1% respondents are between 45&above. Overall result shows that between all of them the respondents who hasa ge limit between 15 to 35 years (63%+24%= 87%) people are more familiar to shop online on my target population, 3.0CUPPATION WISE RESPONDENTS Business House | Salaried Student | Total person Wife | No. of! 8 7 46 39 100 respondent Percentage 8 7 46 39 100 —*| 30Analysis and Interpretation: In this survey, 46% of the respondents are salaried and 39% are students. So they both together Business person House wite Salaried mstudent made majority of respondent's percentage (85%). 8% are business persons and 7% are House wife. Salaried persons and students will always look for new technologies and new services which make them more comfort. 4, EDUCATIONAL QUALIFICATION WISE. Graduate Post Graduate SSC & Equvalent | other Number OF | 63 36 0 1 respondent Percentages 6 36 0 1 31ome Graduate post graduate SSC or Equivalent =P Analysis and Interpretation All of them in this survey are graduate and above qualified peoples only. Among these 63%are graduates, 36% are post graduates and one person is PhD 5.INCOME WISE RESPONDS 03L 3-6L 69L ] 9L &above Number Of | 60 23 13 \4 Respondents | Percentage 60 B 13 ig Graph 4.5: Income wise respondents Annual Income 4 7 32‘Analysis and Interpretation Since 39% of this survey is students most of them are of 0-3L income range, i.e. 60%. 23% of them are in 3-6L income range, 13% in 6-9L and 4% is 9 & above 6.FREQUENCY OF PURCHASE FROM ONLINE Always Often Sometim | Seldom ‘Never Total e Male 5 21 29 3 0 58 Female 4 14 23 1 0 Total 9 35 a 4 0 100 Graph 4.6: online shopping usage as = 2 , . . i ‘Often Sometimes Seldom Never Male uFemale Analysis and Interpretation: More than half of them use online shopping sometimes, ie. 52%. People who always and ‘mostly shop through online shopping are also good in number, 9 and 35, together 44%. And who use online shopping rarely is very less in number 4% Since only 44% are mostly using 33this, there is a wide space fo fill and to make online shopping a great success. And there Is not much gender difference in online shopping, which means both males and females enjoy in online shopping and its benefits 7.MODES OF AWARENESS ABOUT FLIPKART Word | Adv. [Blog of |Links | Emails |Search | Total OF — | T.V_| Recommen | Froms Mouth dation Other No OF} 39 22 [2 15 5 7 100 Respondents Percentages | 39 2 |2 5s 5 7 100 Graph 47: Modes of awareness shout Flipkart No: of respondents ou GBRERBE Analysis and Interpretation: Most of them are aware about Flipkart through word of mouth (39%) followed by television and online advertisements (22%), Customers got awarded through blog recommendations(2%) and promotional e-mails (5%) are very less in number .This means a good communication about Flipkart is going on through friends and families, which proves that word of mouth strategy by them is the most successful means of 34making people aware about their products. Success can only be gained through delighted custo merswho act as advocates for their products and there is a wide scope of other digital advertisement techniques like search engine marketing, email- marketing, providing links and blog recommendations in order to make more customers, 8.FREQUENCY OF USING FLIPKART WHILE ONLINE PURCHESING EVERY | OCCASIONALLY |MOST | HARDLY | TOTAL TIME OF | EVER ‘THE TIME NO. OF | 17 45 32 6 100 RESPONDS PERCENTAGES | 17 45 32 6 100 Graph 48: Frequency of using Fipkart No: of respondents frye Oceaoaly Mostt theme Har eer Analysis and Interpretation: Here on this survey 17% are always choosing Flipkart for online shopping, while 45% are using it occasionally. Hardly ever using members are very less, and 32% are using it most of the time. Since more than half of them prefer Flipkart while thinking of online shopping, it means branding had done successfully by them either through advertisements, services or providing good experience to customers 3510.REASON FOR CUSTOMERS CHOIECE « ss x0 2s 2» a as © s ° Ati tam omens erates Fas Debvery aby Analysis and Interpretation: Fast Availability [After Sale [Easy Portal | Total delevery Services | payment | Features Options Responses al 29 8 7 3 100 Percentages 41 29 8 17 5 100 sunesponas ‘One of the most efficient features in Flipkart is fast delivery when compared to other online shopping websites So, most of the customers prefer this website for shopping with the perception of quick delivery (41%) and availability of product (29%), followed by easy pay ment options (1796). And there is a scope of increasing after sales services and portalfeatures when comparing with other features 3611. PRODUCT SELECTION ON THE BASIS Rating of the | discount [review | brand | Total product Noofresponsence | 14 8 26 12/100 Percentages 4 B 26 12 [100 Graph 4.11: On the basis where product is chosen No: of Responses Analysis and Interpretation: Customer perception varies while using Flipkart; it is one of the online shopping sites which give high discounts and offers. Most of them in this survey (48%) are looking for good featured product with high discounts while purchasing products from Flipkart. And also customers more often go through the product review (26%) before making their decision to purchase. Product review is a kind of word of mouth strategy where product users leavetheir review on their experiences with Fli art, Customers are giving priority to these two features while brand of product (12%) and rating of product (14%) also taken care by some other customers 712.RATEING OF THE SERVICES BY FLIPKART Excelle [Good | Average | Below Poor nt Average Cash on delivery | 46 a |S 2 2 30 days | 23 35 ~*(20 2 0 replacement | EMI option a ae (3S 5 1 Free shipping 33 a4) (a7. 2 2 Graph 4.12: Rating of Flipkart services mcamondetvery (550 aays eptcement pey Biree coe Analysis and Interpretation: 46% of respondents are rated excellent for cash on delivery service, while for 30 days 38replacement policy 55% rated good and 23% rated excellent. For EMI options 48% rated good and 21% rated excellent, and for free shipping 35% rated excellent. While analysing the data, customers have more interest in two services of Flipkart: That is,30 days replacement policy and EMI options. Since Flipkart is providing 30 days replacement policy for all the products in the platform. And this combined mix service increased the customer trust .In case of EMI options, Flipkart is the only site which accepts all credit cards and thus it provides a better payment options to the customers. Cash on delivery is a compactable service that provided to the customers and they are much satisfied on that service also. Even some rated less for this service, may be because of less customised experience on cash on delivery In case of free shipping, Flipkart provide this service for total purchase of rupees 300 and above only. So it may affect some of the customers who purchase less price products frequently CONSOLIDATED INCOME STATEMENT FY2016 FY2015 SALES (USD MILLION) 490.31 489,00 SALES 32,242.91 | 29,899.17 GROSS PROFIT 10,373.80 | 8,426.07 | EBITDA 4,240.15 | 3,244.07 INTREST 120.99 164.69, DEPRATATION/AMORITIZATION 691.25 85135 OTHER INCOME 216.76 256.65 PROFOT BEFORE TAX 3,644.67 | 2484.67 PROFIT AFTER TAX 2815.00 | 2369.87 L This statement gives idea about consolidated income stament for the fy 2016 and 2015 where it indicates total sales,gross profit earning before intrest ,total intrest, amortization, profit before tax and profit after tax, Through this statement we can calculate leverage and ratio relating to income statement. 39CONSOLIDATED BALANCE SHEET EQUITY & LIABILITIES FY2016 FY2015, SHARE CAPITAL. 375.65 376.13 RESWERVES & SURPLUS 13431.26 1257.72 TOTAL SHAREHOLDERS FUNDS 13806.91 12953.85 SHARE APPLICATION MONEY 0.63 7.65 NON CURRENT LIABILITIES 2188.24 1203.15 CURRENT LIABILITIES 5056.41 8573.29 TOTAL 21952.19) 2737.94 TOTAL ASSETS FIXED ASSETS 2850.45, 2328.20 GOODWILL ON CONSULITATION 4024.66 5087.93 OTHER NON CURRENT ASSETS 2299.62 2172.91 CURRENT INVESTMENTS: 0.04 5390.38 TRADE RECEIVABLES: 6860.87 6978.70 CASH AND CASH EQIVALENTS 3953.21 3637.54 OTHER CURRENT ASSETS 1963.28 1942.28 TOTAL 21952.19) 2737.94 40KEY RATIOS, FY2016 | FY2017 (%) (%) REVENUE GROWTH 7.84 10.98 EBITDA GROWTH 30.70 (22.44) PAT GROWTH 18.78 8) GROSS PROFIT MARGINE 32.17 28.18 EBITDA MARGINE 13.15 10.85 PAT MARGINE, 873 793 SG&A TO REVENUE, 19.02 17.24 ROE 21.04 18.45 | RETURN ON CAPITAL 16.42 13.29 i DEBT TO EQUITY 0.28 0.39 | CASHTOTAL ASSET 18.01 16.02 BASIC EARNING PER SHARE 14.72 12.49 Revenue (¢ million) wig” FvIS "FYI6 4ainterpretation This above graph shows the amount of revenue in millions in fy 2012 rs 15000 in fy 2014 it is increased to 22386 and it again goes of upto 26940 in fy 2014.and it comes to 29899 in 2015 and finally comes to 32243 in fy 2016 a Profit After Tax (* million) 2a | | 2,490 2.370 FY 12 Fv13 FY 14 FY 1S FY16 interpretation This above graph shows the amount of profit after tax in millions in fy 2012 rs 1454 in fy 2014 it is increased to 1990 and it again goes of upto 2490 in fy 2014.and it comes to 2370 in 2015 and finally comes to 2815 in fy 2016 Basic Earnings Per Share (2) 1472 “4 133 1249 wi” FYI3" FYi4” FYIS «FYI * Previous year's figures have been adjusted for bonus issue. 42interpretation This above graph shows the amount of basic earning per share in fy 2012 rs 8.19 in fy 2014 it is increased to 10.86 and it again goes of upto 13.3 in fy 2014.and it comesdown to 12.49 in 2015 and again comes to 14.72 in fy 2016. 100, Customers - Revenue run rate of USD 1 Mn+ 2 90 el 37 % 74 7 ol g 50 40. 30 20 10 ° iz” fYI3 | FYI4 YAS FYI6 interpretation This above graph shows the amount of customer revenue run rate of USD Imn+ in millions in fy 2012 rs 59 in fy 2014 it is increased to 74 and it again goes of upto 80 in fy 2014.and it ‘comes to 87 in 2015 and finally comes to 92 in fy 2016 Revenues by Geography - FY 2016 Rest of Word 14% Europe 18% usa eee interpretation This above graph shows the percentage of revenue by different geography in fy 2016 from usa 68% from Europe 18% and from rest of world 14%. a3CHAPTER - 5 Summary of Findings, Suggestions & Conclusion3.1 FINDINGS: There is not much difference in gender for using online shopping Students and salaried persons are most frequent users of Flipkart Frequency of purchase for electronics, books and music, apparels and accessories are more in Flipkart. Word of mouth was more influential in promotion as many people were made aware by their friends and family when customers recommend this website to them. Highly discounted products got out of stock quickly, since customers purchased it assoon as they could when they see high discount on good featured product. The services provided by Flipkart are good and even more scope of development is there for increasing the customer strength. Digital marketing techniques like search engine marketing, links providing otherwebsite and advertisement also functioned well for promotion of this website Fast delivery is one of best service Flipkart is providing Different payment options available in Flipkart made customers more satisfied and comfort for paying while purchasing product. Customers feeling more secured when purchasing through Flipkart because of different policies and services they have In comparison with competitors, Flipkart is charging free shipping for the purchase 0f300 plus rupees, while others free ship the service without any barrier. Out of stock is the mé issue faced by Flipkart Most of customers have good experience with Flipkart while purchasing products. Most of them are satisfied with the services of Flipkart and so that they succeed in retaining the customers Advertising is an important way to have the brand and products familiar to consumers. Convenience and time saving are two important factors that customer looking for while purchasing through online Sales revenve of the firm increases day by day Basic earning per share is also increasing and market price of the share also increasing, In USA flipkart product is very demand Profit after tax also increases. 4s,§2_ RECOMMENDATIONS © Flipkart has successfully placed itself into the prospects mind making it the Indias largest online store with huge range of products. But it still needs to work on their core competence that is books and stationery items. © Delivery services can be improved mainly in rural areas by selecting appropriate courier service which has services in customer area for dispatching an item. * Can make free delivery to all priced products. * Can include more coupon codes and gift vouchers for increasing the traffic of the customers. * Out of stock items can made available as soon as possible and intimate the needed customers ‘© Should look for International/ Overseas markets or Neighbouring Countries. © Critical mass of Internet users Internet users in India is increasing at increasing rate ,so Flipkart can target more & more cities ie not only tier 1 & 2 but also tier 3 & Acities, which will help generate stronger customer base & more revenues * Should clearing focus on the Growing Online Apparel business & it can diversify into apparel category either organically or inorganically by acquiring other portals. ‘* User Experience: Portal should continuously aim to work to improve the user experience by adding more & more innovative features in the website like virtually shopping basket, virtual trial rooms. In this competi e world to differentiate via user experience, the ultimate winner will be the Indian online consumer. Should comprehensively invest into E-CRM & online reputation management, * Logistics & Supply Chain: can contimiously aim to reduce the delivery time cycle. * Price will still be a factor as amazon being a huge company will use its economies of scale to remove their competitors from the market; therefore they need to be more competitive on that aspect * Maintain the market value and earnings per share + Maintain the revenue from operation. * Focused in India how to increase our revenue ? * Take steps to increase our sales and have to decrease the cost of marketing, 46$3 CONCLUSIO! The thorough study is based on the consumer behaviour analysis which serves a great idea regarding consumer perception when they go for online shopping. In order to satisfy themselves consumer perceive many things before buying products and they will be satisfied if the company meet their expectation The Overall Brand Value of Flipkart is good, but it is facing some tough competition from its global competitors like Ebay and Amazon. Talking about domestic market i.e, India, it is the most superior E-business portal which is aggressively expanding & planting its roots deep into the Indian market & at the same time shifting the mind-set of the people from going &shopping from physical store to online stores, which is magnificent! Be very focused on consumers and build amazing experiences for the customers. a7BIBLIOGRAPHY 1 C.R Kothari, Research Methodology. New Delhi, Vikas Publishing house Pvt.Ltd.2007. 2, AK. Gupta’s(IMPACT) Banker's Training Institute. 3. Choudhury, U, (2012). The Flipkart story. [online] The Hindu. Available at hutp://www.thehindu,com/features/magazine/the-flipkart-story/article3290735.ece [Accessed 19 4, The Times of India. (2015). NLSIU students analyze problems in Flipkart’s Billion Day sale - The Times of India. {online] Available at http://timesofindia indiatimes. com/city/bengaluru/NLSIU-students-analyze-problems-in- Flipkarts-Billion-Day-sale/articleshow/45828405.cms [Accessed 19 Jun. 2015] Jun. 2015] Websites:- www-google.co.in www.wikisanswers.com www-homeloanshub.com www.financialexpress.com www.NdTV profit.com www.obcindia.co.in www.rbi.org.in www.iloveindia.com www. flipkart.com/ https://vww.amazon.in WWW.wikipedia.com 48