case study of an emerging giant in the o

8/20/2019 Case Study of an Emerging Giant in the O

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Case Study of anEmerging Giant

in The Online

World -FLIPKART

Harish K. Raman

Symbiosis Law School, Pune

(Constituent of Symbiosis International University)

BBA.LL.B(C)

P.N.R. No.-13010124268

E-Mail Address - [email protected];

[email protected]


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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 it’s quite a sensation in today’s 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 methodsof 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


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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 path-

breaking 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 aday 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 Wood’s

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.


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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 Chakpak’s 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

1Taken From http://www.livemint.com/Companies/pbOfYVBQigpqm1D2FguQDO/Flipkart-raises-160-million-

in-another-round-of-funding.html


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for Pages missing, MRP printed lesser than told to consumers. 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

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

that’s exactly what the folks at Flipkart have done.

Table 1 - Strength Weakness Oppourtunity Threat (SWOT) Analysis –

SWOT HELPFUL HARMFUL

INTERNAL

FACTORS

Strengths

Brand

Supply Chain Management

Quick Turnaround TimeAdvertisement And Promotion

Strategic Acquisitions

Huge Reach

Weaknesses

Delivery

Internet Penetration

Payment GatewaysHigher Costs

EXTERNAL

FACTORS

Opportunities

Growth In E-Tail

Growth In E-Book Culture

Broadband Penetration

Mobile Apps

Threats

New Players Such As Amazon

Next we need to see the Challenges Faced by Flipkart -

Initially when they started out, it wasn’t 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’


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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 Flipkart’s 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

Convenience

Ease of finding the product and related

information

Purchase at the click of a button

Cash/ Card on Delivery

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


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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.

Flipkart’s 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

payment - This has been a major instrument in Flipkart’s 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 startup’s success, so

some of the key criteria that the Flipkart team looks at while hiring are - They typically don’t

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 brandcampaign 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


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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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REFFERENCES: -

http://ankitmarketing.blogspot.in/2011/12/flipkartcom-legend-in-making.html

http://blog.flipkart.com/2-new-features-cash-on-delivery-online

http://businesstoday.intoday.in/story/flipkart-online-shopping-e-commerce-order- books-online/1/20797.html

http://mediapanther.co.in/marketing/the-flipkart-success-story

http://thenextweb.com/in/2012/08/13/digital-music-takes-indias-flipkart-flyte-soars-

past-600000-downloads-6-months/

http://timesofindia.indiatimes.com/tech/news/internet/Flipkart-raises-150m-in-latest-

funding-round/articleshow/15674360.cms

http://trak.in/tags/business/2012/06/01/jabong-trumps-flipkart-offers-door-step-card-

payment-cod/

http://www.hindustantimes.com/technology/IndustryTrends/How-Flipkart-broke-

India-s-online-shopping-inertia/Article1-780440.aspx

http://www.livemint.com/Companies/pbOfYVBQigpqm1D2FguQDO/Flipkart-raises-

160-million-in-another-round-of-funding.html

http://www.quora.com/Is-Flipkart-making-a-profit

http://www.quora.com/What-will-happen-to-Flipkart-when-Amazon-launches-its-

operations-in-India

www.flipkart.com

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