Flipkart Case StudyBy : - Abhinab Robert Rao, Anurag Bari, Nitish

Sahu, Poonam Bachiyani, Tanuj Sethia

Online retailing Online industry is booming in India.

The huge population is only one part of the story because of Low Internet usage, low credit card penetration, slow internet speeds and fulfillment issues.

It took time for the customers to adopt Modern Retail Outlets format like Reliance Fresh.

Then came yet another format : e-retailing.

It was really tough to break into this space because Indians were very skeptical about doing transactions online; providing their passwords , debit card number and all.

Schemes like Cash On Delivery & EMI system made it easy for the customers to get used to online purchase.

These online portals often sell at loss for getting the traffic in their website & getting them experience their service.

Consumer analysis

Time poor

Want everything at ease

Need a wide range of products to choose from

Need deliveries on time

Want their information to be kept confidential

Mission

Mission – Providing a delightful and memorable customer.

Vision – To become the Amazon of India.

Objective - Completely hassle free shopping experience with best prices in India.

Core Values

Customer Obsession

Ownership

Impact

Honesty

Selflessness

Communication

Innovation

Introduction of New Category Over the years in Flipkart

2007- Books

2010- Media. Mobile Phones & Accessories.

2011- Gaming and Console , Audio Players and TV, Personal and Health care, office Supplies, Home and Kitchen.

2012-Health and Beauty , Lifestyle, Toys, Posters, Apparels, Sport and fitness, Shoes.

Important factors

Order flow :- Customer -> Desktop, Mobile Site, Mobile Apps -> Flipkart page -> Place Order-> Confirm order.

Customer Policies-> Payment Options, Cancellation Policies , Refund Policies

Flipkart website Indian ranking 10.

Marketing:- Offline and Online Media both.

Result of marketing Initiatives:- Growth in traffic, Growth in orders received and Growth in revenue.

StrengthsWeaknesse

s

Opportunities

Threats

SWOT

Strengths

• Strong Brand Value

• Own logistics arm e-Kart

• Own Online payment gateway solution Payzippy.

• Own Marketplace Model.

• Acquisitions

Myntra.

Mime360

Weread.

Chakpak.

Letsbuy.com.

Weaknesses

• Investor driven organization or lack of independent board.

• Secretive Political Culture.

• Excessive focus on expanding customer base rather than pulling profits.

Opportunities

• Providing logistics services to its competitors.

• Growth in online retail sector in India.

Threats

From competitors like Amazon, Snapdeal, Infibeam, Indiaplaza, Homeshop18 etc.

Online Retail Industry

1.4 – 1.6 Billion $.

Will grow to 10 billion $. To reach $76 billion by 2021.

Growth driven by the country’s growing Internet – habituated consumer base.

180 million broadband users by 2020, and a burgeoning class of mobile Internet users.

Major Challenges for Online Retailers

Customer Loyalty, Trust and Education.

Most of the customers prefer Cash on Delivery option instead of credit/debit card payment.

So, this makes online retailers to lose some of the cash as the delivery companies will keep the money for 15 days and later they pay to these online retail companies.

Porter’s Five Forces Frameworkof this Industry.

Supplier power:

In this industry, suppliers are the manufacturers of finished products like Nike, Dell, Apple etc.

Online retail companies sell various products ranging from books to computer accessories to apparels to footwear.

Since there are many suppliers for any particular category, they can’t show power on online retail companies.

Buyer power:

Buyers in this industry are customers who purchase products online. Since this industry is flooded with so many players, buyers are having lot of options to choose.

Switching costs are also less for customers since they can easily switch from one online retail company to other one.

Same products will be displayed in several online retail websites. So, product differentiation is almost low. So, all these factors make customers to possess more power when compared to online retail companies.

Threat of New Entrants: Indian government is going to allow 51% FDI in multi-brand online retail

and 100% FDI in single brand online retail sooner or later. So, this means foreign companies can come and start their own online retail companies.

There are very less barriers to entry like less amount of money required to start a business, less amount of infrastructure required to start business. All you need is to tie up with suppliers of products and you need to develop a website to display products so that customers can order products, and a tie up with online payment gateway provider like bill desk.

Industry is also going to grow at a rapid rate. It is going to touch 76 billion $ by 2021. Industry is going to experience an exponential growth rate. So, obviously no one wants to miss this big opportunity.

Threat of substitutes:

Substitute for this industry as of now is physical stores. Their threat is high for this industry. Though the customers are going for online purchases instead of going to physical stores as it will save time, effort, and money. But still many people still rely on retail stores.

When we compare relative quality, relative price of product that he/she buys online with physical store, both are almost same and in some cases, online discounts will be available which makes customers to buy products online.

Rivalry with in Industry:

Competition is very high in this industry with so many players like Flipkart, Myntra, Jabong, Snapdeal, Amazon, Indiaplaza, Homeshop18 etc.

Environmental Analysis

Demographic trends: When it comes to online retail industry, for people to shop online, they need to have internet. India is third largest country when it comes to internet usage after U.S and China. Presently, above 200 million people are using internet.  Out of this, 110 million people access internet through mobiles. In India, 8-10% of online users transact online. So, it means it comes to 20 million people. And also, with smart phones, tablets coming into picture, number of people who are going to use internet is going to be increased. This means, increase in the online retail usage in India.

Socio-cultural Influences: 

• Culturally, Indians tend to buy the products in physical stores. They want to touch, feel the product before buying.

• If the risk associated with product is very high, like in purchase of Television, Laptop, Washing Machine etc., they tend to go to physical store.

• Indians will mostly influenced by peers, friends while purchasing the products. So, these factors are negatively affecting online retail industry.

• But slowly, culture of buying is changing. They are going for online purchases but this rate is less when compared to offline purchase. But with 30 day replacement guarantee, if the product is not functioning properly, by E-commerce companies, and with the availability of peer’s or friend’s feedback about products online, they are slowly moving from offline to online purchases.

Political-Legal factors:  India is pushing for Foreign Direct Investment in Online Retail Industry.

Technological Factors:  

 With the advancement of technology at a rapid pace, online retail industry  is going to benefit a lot.

Several technological devices like smart phones, laptops, tablets etc. are going to help this online retail Industry because with the penetration of these devices, Indian consumers are going to purchase their products online.

Even Smart phone market is growing at a very rapid rate in India.

Since companies can gather the data about their customers when they are doing business with them, they can use these data to personalize the services by using predictive analytics

Competition

The competitors for Flipkart are not only the online portals but also the offline marketers like Reliance fresh , big bazaar , etc.

Flipkart is an attacker brand who has adopted flanker attack strategy to fight against competition from leader brands like amazon.

Actions recommended for Flipkart:

Since online retail is going to boom in the coming years, it is necessary for this industry to have logistics support. So, since Flipkart is already having its own logistics arm E-kart, it can provide this logistics service to its competitors in online retail industry.

In this type of industry, price matters a lot to customers. If same product is offered by two e-tailers at two different prices, customers will go for the lowest price. So, Flipkart should try to offer the products at lower prices. This can be done by optimizing its logistics services. Since logistics cost plays an important role in determining the price of the product. Filpkart should try to optimize its supply chain in such a manner that its supply chain costs should be very less and try to offer products at lower price compared to its competitors.

Predictive analytics are going to play a big role in the future.. So, Flipkart can use data about its customers like what are they buying, what are their buying patterns and can target them by using predictive analytics. For example, Amazon uses customer’s purchase history and suggests products according to it.

Flipkart can also employ relationship marketing into it. Instead of mainly focusing on customer acquisition, it should also focus on customer retention. Because loyal customers are more profitable when compared to new customers.