Flipkart WiRED 6.

0 | Campus case challenge | Supply chain

Flipkart, which started operations in 2007 by selling books, is today the largest e-commerce player in
India — with approximately 250 million subscribers operating across 80+ major categories. With the
internet base expanding in India, Flipkart is eyeing this opportunity to come up with many new initiatives
to ensure top-of-the-mind brand recall for online shoppers. Customer First is one of the core values at
Flipkart since inception and here are some of the initiatives that the company has experimented with to
increase customer engagement and mindshare:

2010 Cash-on-Delivery Service

2011 30 Day Replacement Policy

2012 Fashion & Lifestyle Category Launch

2013 Launched Marketplace & Same Day Delivery

2014 The First ‘Big Billion Day’ Sale

2015 Flipkart Lite - Mobile Focus

2016 No Cost EMI

2017 Private Labels & Expanding Categories

(Large Appliances, Furni-sure, Refurbished business)

2018
Grocery, Shopper Audience Platform (tie-up with Hotstar),

2019
Flipkart Plus Buy Now Pay Later, 2Gud, Supermart, Supercoins,

2020 Quick, 2GUD influencer commerce, Leap, Flipkart Wholesale

2021 Flipkart Camera, Shopsy

Problem Statement

Consumer internet demand is on the rise across India. There are a whole set of new customers
coming onboard to transact online and purchase items spanning from smartphones to grocery.
While there is a base shift in demand across the geographies, there is a significant increase in
online commerce penetration in Tier 2+ geographies and middle India customers. This shift has
interesting implications for a multi-category pan India marketplace platform, like Flipkart. With
new shoppers coming online, the average selling price on platform drops and it entails that we
need to design a low cost supply chain to support the business designed on lower selling price

Customer and seller experience is at core of the Flipkart business design. The challenge for us is
to create a low cost supply chain while preserving customer & seller experience. There are
multiple input drivers of supply chain cost and the low cost supply chain design needs us to look
at the input drivers differently and challenge traditional wisdom on the drivers;
As a part of this project, Flipkart/Ekart is looking at supply chain solutions which will help in
supporting scale up of low ASP business with an efficient supply chain cost ; while maintaining
experience guard-rails for customer and sellers. We are looking at innovative and yet,
implementable ideas which can be leveraged in supply chain design to create a low cost SC

Context on Flipkart supply chain

Flipkart supply chain has three key sets of assets-
1. City Logistics- Pick up products from sellers, connect to sortation centers & deliver
products to customers
2. Fulfillment centers- Store products, pick-pack-dispatch on order placement
3. Sortation centers- Sort products for local, zonal & national connections
Challenges -

1- Flipkart does not want to compromise on base experience for customers and sellers
2- Inflationary economy- This impacts manpower, rental & fuel cost- key input cost drivers of a
Supply Chain
3- As supply chain moves into Tier 2 and beyond, demand density is lower which impacts costs
of last mile in Supply Chain

Key Deliverables for Idea Brief Submission Round:

1. In not more than 3 slides (excluding cover & annexures), answer the following:
a. Design a comprehensive supply chain design, which can support Low ASP products
b. What are the choices made to support the design of the proposed supply chain?
c. What are the key product/ technical capabilities required to support the supply chain
d. Work out a Comparative cost view between normal supply chain & low cost supply chain (by
factor cost)

Important Guidelines for the Idea

● Keep context of current supply chain challenges in India and compatibility of Flipkart in mind
while exploring solutions
● Implementation timeline should not exceed 1-2 years
● Feasibility of the solution to be used even with business scaling up in future

Some Metrics for Reference -

1- Last mile (City logistics) is the biggest contributor of supply chain cost (40-45% of variable cost)
2- Line haul is semi-variable cost; incurred at per route per truck level (20-25% of overall cost)
3- Sortation centers are a pass through asset and are utilized based on input & output connection
timings (10-15% of overall cost)
4- First mile (pickup from seller) impacted by number of touch-points (15-20% of overall cost)