Marketing Management

CIA – 2
Flipkart: Grappling With Product Returns

Team members –
Lakshya Gupta (PGDM22107)
Archita Mishra (PGDM22032)
Rohan Singh (PGDM22175)
Abhishek Thakur (PGDM22009)
Shaik Hassain Basha (PGDM22203)
Priya P Nair (PGDM22154)
Shruthi Tripathi (PGDM22219)

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 Contents
S.No. Topic Page No.

1 Introduction 3
2 Case Description 4
3 Key Problem 4
4 Background 5
5 SWOT Analysis 6
6 Solutions 7

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Introduction

Flipkart is an Indian e-commerce company, which is headquartered in Bangalore and

incorporated in Singapore as a Private Limited Company. It was started in the year 2007 by
Sachin Bansal and Binny Bansal. The company initially focused on online book sales before
expanding into other product categories such as consumer electronics, fashion, home
essentials, groceries, and lifestyle products.
The service competes primarily with Amazon's Indian subsidiary and domestic rival
Snapdeal. As of March 2017, Flipkart held a 39.5% market share of India's e-commerce
industry. Flipkart also owns PhonePe, a mobile payments service based on the UPI.
In August 2018, American retail chain Walmart acquired a 77% controlling stake in Flipkart
for US$16 billion, valuing Flipkart at around US$20 billion. Flipkart is valued at $37.6
billion as of 2022.

Market Share

FLIPKART 31.9%

AMAZON 31.2%

MYNTRA, JABONG 21%

OTHERS (MEESHO, SNAPDEAL) 16%

Awards and Recognitions

 Sachin Bansal was awarded Entrepreneur of the year 2012-2013 by Economic
Times.
 The two founders entered in the Forbes India’s (Richest Indian by year) in
September 2015.
 In April 2016, the two founders were named to Time magazine’s annual list of the
100 most influential people in the world.
 Flipkart was reported to be at top in the annual Fairwork India Ratings 2021 - which
is a 10-point system that creates a score based on fair pay, conditions, contracts,
management, and representation.

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Case Description

In June 2016, Indian e-commerce giant

Flipkart Private Limited (Flipkart) faced
a common issue among online retailers:
the firm needed to optimize its product
return rates to reduce losses caused by
returns.
Accordingly, Flipkart changed its return
policy, including raising the commission
fees charged to sellers by an average of 5 per cent. Many sellers resented the policy change,
and more than 1,800 led an online protest against Flipkart. These sellers made their accounts
inactive and removed the product listings for nearly 1 million product units. Seeing an
opportunity, Amazon India decreased its commissions on various product categories by 2-7
per cent to lure sellers to its platform.
While its competitors experienced rapid growth, Flipkart struggled to keep the market share it
had acquired so far. The company experienced a massive drop in its valuation during the year
2015-16, and had not registered any profit since its inception in 2007. Flipkart had to reduce
its losses resulting from a high number of returns without displeasing both of its key
stakeholders-sellers and customers.

Key Problems
 Customer’s misusing ‘No questions asked policy’
 Addressing the increase in loss by 49%
 Effects of frequently changing trends on Flipkart
 How could Flipkart reduce losses resulting from the excessive returns while pleasing
both their customers and sellers

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Background

1. Financial state of Flipkart

 Since the inception of Flipkart in 2007, Flipkart has not been able to generate
profit. The company registered a loss of $343 million in FY 2015-16 as
compared to $170 million in FY 2014-15.
 Return rate for online purchases was over 30 percent as compared to 8.89
percent for offline purchases.

2. Competition between Amazon and Flipkart

 Amazon has low shipping charges as compared to Flipkart.
 Amazon and Snapdeal are more user friendly.
 Due to this market share of Flipkart dropped.

3. New return policy

 Sellers would be charged more commission
 Paying the commission fees for all returns whether the customer had opened
the package; only when the package was returned without being opened could
they avoid paying this fee.
 High Marketplace commission.

4. Alternatives
 Keeping the new return policy intact with few changes such as commission
charged only on only defected returned goods.
 Implementing a Quality check on Returns
 Entering into verticals like grocery delivery or streaming platform would
provide an extra boost to Flipkart’s revenue.

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SWOT Analysis

Strengths

 High Customer Loyalty - Flipkart Sellers old customers are still loyal to the firm
even though it has limited success with millennial. I believe that Flipkart Sellers can
make a transition even by keeping these people on board.
 Experienced Team - Flipkart Sellers management team has been a success over last
decade by successfully predicting trends in the industry.

Weakness
 Easily Replicated - According to Sanjeev Prashar, Mukesh Kumar, Amit Kumar
Mukul, the business model of Flipkart Sellers can be easily replicated by players in
the industry.
 Little experience in International Market - Flipkart Sellers has little experience in
international market, they need international talent to penetrate into developing
markets.

Opportunities
 Business models - E-commerce business model can help Flipkart Sellers to tie up
with local suppliers and logistics provider in international market. Social media
growth can help Flipkart Sellers to reduce the cost of entering new market and
reaching to customers at a significantly lower marketing budget.
 Developments in AI - Flipkart Sellers can use developments in artificial intelligence
to better predict consumer demand, cater to niche segments, and make better
recommendation engines.

Threats

 Comprehensive mobile strategy - Customers are moving toward mobile first

environment which can hamper the growth as Flipkart Sellers still hasn’t got a
comprehensive mobile strategy.
 Home market technique - Home market marketing technique won’t work in new
markets such as India and China where scale is prized over profitability.

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Solutions
Returning products is an important part of a business. There are steps that can be taken to
reduce or prevent returns. But, at the same time, you must also know how to manage the
returns to offer a pleasant experience to the customers. Various reasons for returning the
products by the consumers are: -
 Difference between the displayed and delivered product
 Size related problems
 Irrational consumer behaviour
 Expectations not matched
 Delivery of wrong product

The solutions for this can be: -

1. Pack and ship products securely - your delivery carrier plays a big role in this. But
there are steps you can take to minimize the chances of an item becoming broken or
faulty through shipping—and therefore, being returned:
 Inspect every item of clothing before it’s dispatched to a customer
 Use protective material, such as bubble wrap, in a delicate package
 Add Fragile labels to parcels with easily breakable items inside (like glass)

2. Provide accurate information – In online retail one of the major problems is that the
information provided about the product is not always accurate which increases the
rate of returning the products. Therefore, accurate information should be provided.

3. Feedback - Making customers give honest feedback and then work on it will surely
help in reducing product return in the future. Making it a priority will ensure lower
returns and higher profit and higher customer satisfaction.

4. Use AR and 3D on your website - Most of the returns occur because the product
looks different on website and different when they receive it or there is no
standardized size pattern that the sellers follow. So, to overcome this, AR or 3D will
come in handy. People will know the exact size and pattern of the product before
purchasing. This will help in reducing product returns.