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This term paper for Product and Brand management is on Flipkart, the online megastore. Online shopping has to do with the Western nations for quite some time and Indians are very restrained to online shopping. The quality of goods, credibility of shopper, payment options, delivery time etc are the most important things that stand in the minds of people wanting to do any online shopping. With users of internet increasing multiple folds every year, people want to do miracles by sitting before their laptops or home PC. Though Amazon is one of the earlier players in the industry, it is FLIPKART which is one of the Indian players in this industry which really brought about the great change in the mindset of Indian population. This term paper outlines the
Flipkart is an Indian e-commerce company headquartered in Bangalore, Karnataka. It was Sachin Bansal and Binny Bansal, alumni of IIT,Delhi who started it in 2007. In its initial years, Flipkart focused on online sales of books but it later expanded to electronic goods and a variety of other products. Flipkart offers multiple payment methods like credit card, debit card, net banking, e-gift voucher and Cash on Delivery.
The cash-on-delivery model adopted by Flipkart has proven to be of great significance since the credit card and net banking penetration is very low in India.
Initially word of mouth marketing was used to popularize their company.
2.New product introduction
In 2007, Flipkart started with selling books. The first book sold at flipkart.com was -John Woods’ Leaving Microsoft to Change the World Today. In 2010, they added to their catalogue, media (including music, movies and games) and mobile phones and accessories
In 2011, product launches included cameras, computers, pens & office supplies, computer accessories, home and kitchen appliances, personal care, health care, gaming consoles, audio players and televisions. Flipkart is currently the only authorized online reseller of iPods in India.
In October and November 2011, Flipkart acquired the websites Mime360.com and Chakpak.com Later, in February 2012, the company revealed its new Flyte Digital Music Store. Flyte, a legal music download service in the vein of iTunes and Amazon.com, will offer DRM-free MP3 downloads. Flyte offers browse by language options where users can download international as well as regional songs. Flipkart has listed the music based on its genre on the new music store and has given a lot of variety. Users can shop for tracks from various albums starting at 6 on the store. A purchased song can only be downloaded maximum 4 times on an internet enabled device. Flyte garners 600K downloads in 5 months
In 2012, product launches includes health & beauty products, Life style products which includes watches, belts, bags & luggage.
As far as future is concerned, Flipkart will be looking at bigger investments in our supply chain and technology. In terms of sales they were earlier looking at a figure of $1bn by 2015. But this can be achieved in the next one to two years. Flipkart will also be looking at entering new categories. Additionally, Flipkart Self-Delivery, which currently operates in 27 cities, will be further scaled up.
In a landmark move, NH7.in, a platform to discover independent music and leading-edge culture created by Only Much Louder (OML), has partnered with Flipkart.com to create an exclusive section dedicated to independent music on the Flipkart digital music store, Flyte. The store will enable independent artists across the country to sell their music digitally to their fans.
The NH7.in store on Flipkart will be a game changer. Up until now, independent artists had limited avenues to retail their music to the ever-growing fan base for indie music. The NH7.in community represents the largest group of indie music lovers in the nation. Now, along with promoting independent music, NH7.in creates an avenue for artists to sell music directly to their fans, which is the crucial next step for independent arts to grow. In addition to this, four million monthly users of Flipkart will have access to a wide selection of independent music from India and around the world at their fingertips.
In July 2012 Flipkart announced the launch of its in-house brand Digiflip. Digiflip is a brand of digital accessories with products like laptop bags, laptop sleeves and camera bags among others
The following are the acquisitions by Flipkart
2010: WeRead, a social book discovery tool.
The stated 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.
Chapak.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.
Letsbuy.com is India’s second largest e-retailer in electronics. Flipkart has bought the company for an estimated US$ 25 million.Letsbuy.com had been closed down and all the traffic of Letsbuy is diverted to Flipkart.
4. Acclaims and accomplishments
Flipkart is among the top 30 Indian Web sites and has been credited with being India’s largest online bookseller with over 11 million titles on offer. Flipkart broke even in March 2010 and claims to have had at least 100% growth every quarter since its founding. As of today, Flipkart employs over 4500 people. Flipkart is the third largest online shopping store after EBay and Amazon.
From a start-up with an investment of just four lakhs rupees, Flipkart has grown into a $100 million-revenue online retail giant in just five years.
Flipkart’s reported sales were 40 million in FY 2008-2009 200 million in FY 2009-2010 and 750 million for FY 2010-2011. In FY 2011-2012, Flipkart is set to cross the 5 billion (US$100 million) mark as Internet usage in the country increases and people get accustomed to making purchases online. At average, Flipkart sells nearly 20 products per minute and is aiming at generating a revenue of 50 billion (US$1 billion) by 2014.
Flipkart.com, the country’s first billion-dollar-valued Internet Company, is surely in a state of perpetual excitement. With 2500 people, daily sales touches a crore. Flipkart has become synonymous with online book retail and large-scale e-commerce in India. And the key to the company’s success lies in its payment-on-delivery model, which helped overcome the average Indian consumer’s misgivings and built trust.
5. Product Strategy
Flipkart is set out to create something for the Indian market – a service that was specifically built keeping the Indian consumer in mind. For them, the biggest inspiration continues to be the constant learning process that has been a part of their journey. The other has been the ability to realize our dream of doing something for the Indian consumer.
As far as entrepreneurship is concerned, Flipkart believes that the core focus for every start-up, regardless of the industry, should be the same – and that is customer focus. By putting the needs of their customer first and listening to what they have to say, is the only route to building a large, loyal customer base – the blueprint to any business success story.
Consistent customer service is the hallmark of Flipkart. Discounts cannot replace the customer’s satisfaction of being serviced promptly and efficiently. Similarly, the trust-building exercise is accorded a lot of importance. Flipkart connects with customers in real-time, through Facebook and Twitter. Honesty is the best policy for this e-commerce trailblazer.
Flipkart is rapidly expanding its network of warehouses, distribution centers, procurement operations and 24/7 customer support teams. The company has its own delivery network in 37 cities and is set to expand this in the current financial year. With a team of around 4,800 members, the company operates from offices and warehouses in seven Indian cities.
6. Operational strategy
Flipkart began operations on the consignment model – goods were procured from suppliers on demand, based on the orders received through the website. However, eventually, the books-to-electronics e-shop adopted the warehouse model. The company has its own warehouses, and maintains its own inventory. Sales projection determines the inventory, and the available inventory accounts for the sales made; it’s a self-feeding cycle of sorts. Nearly 60 to 70 per cent of deliveries take place through their own network as this model provides for better control over the entire logistics management piece.
On the operational front, issues faced by the company pertain to delay in deliveries, or faulty products. As a customer-centric, none of these issues can remain unresolved for long. They faced significant challenges in reverse logistics. It’s a big task to track unsuccessful orders, which are quite costly to manage. Hence, Flipkart stresses on customer service – it aligns with the firm’s philosophy of making better our service promise’. Their bigger objective is to redefine the way India shops.
Flipkart will continue to expand our categories in order to meet the growing consumer interest in the e-commerce market. They have recently added computer peripherals, kitchen appliances, televisions and home theatre systems and selected stationery items to their product range. They will continue to add more products / selection to their existing categories as well.
Flipkart went for a major brand makeover, making it look more ‘up market’. There have been large newspaper ads, TVCs and a lot of web ads. But unlike other ecommerce companies the inorganic marketing kicked in only when the product was strong. Flipkart already had a proven model execution with books and extending to other verticals did not need infrastructural changes. Flipkart’s real achievement has been in solving the pain points in Indian ecommerce that most well funded players are still complaining about.
“No Kidding, No Worries”
No Kidding, No Worries, the recent advertising and branding campaign of Flipkart is a unique example of “Trap Them Young”. An in-depth analysis of recent advertisement campaign of Flipkart strongly conveys Indian youth’s sentiments and their desire. The story board of adverts, features kids in adult situations, like a beauty parlor, a cafe, and an office. The Hinglish language & the happening places is the heart of No Kidding, No Worries advertisement series. The creative director succeeds to keep KOOLNESS of Brand Flipkart.
Flipkart attacks the online fears
Flipkart carefully chooses their way forward. For now, Flipkart seems to be playing their cards right. Flipkart.com has aired three TVCs. Each of the ads attacks a distinct fear in the consumer’s mind towards online shopping, and how Flipkart solves that problem.
Fear of wrong product – 30 day replacement guarantee
Fear of giving credit card details online – Cash on Delivery feature
Fear of not getting the original product – Original products with original warrantee
The creatives using kids to break through the clutter, and the consumer worry and the solution offered by Flipkart is clearly communicated. The brand ‘Flipkart.com’ at the end is also very clear to be missed, which gives the branded breakthrough.
30 day Replacement guarantee
Flipkart.com offers you REPLACEMENT WITHIN 30 DAYS FROM THE DATE OF DELIVERY ON THE product/s ordered on Flipkart.com i.e. if at the time of delivery and/or within 30 days from the date of delivery of the product/s, if any defect is found, then the buyer of the product/s can ask for replacement of the product/s subject to some terms and conditions:
Cancellation of orders of products is permitted before the product gets shipped and the entire payment amount is refundable. But products such e-Gift Vouchers, Wallet Top-Ups, etc are non-refundable.
Flipkart provides free delivery on all items if your total order amount is Rs. 300/- or more. Otherwise Rs. 30/- is charged as delivery charges.
8. Flipkart’s strategy in solving problems in E-commerce
It is the case with any venture on the web, “How does the customer find us?” Answer: Organically! Flipkart has been the “baap” of SEO. This has been the most important contributor to their success. Only when you see people coming to you, you get encouraged to deliver more and keep adding. There is no fun (motivation) in adding features to a product that no one is using.
SEO did not come the straightway. There were particularly 2 things that are worth mentioning.
a. Yahoo News:
Until last year Flipkart had a feed of Yahoo News on its product pages. From what SEO means, this is to increase the keyword density and introduce ‘original’ content on the page, as the product description across all books sites is same.
b. We Do Not Sell Used Books:
We DO NOT sell old books or used books. All the books listed at Flipkart.com are new books.
The books listed at Flipkart.com are NOT available for free download in ebook or PDF format.
The magic of this text is that if searched for “
No credit card/net banking, fear to transact online, repeat transaction failures, no access to web – these are the common problems with online payments. What Flipkart is doing to overcome these?
Flipkart had at least 4 different Payment Gateways integrated. They introduced Cash-on-Delivery. Then they are also doing order on phone. Payment via DD/Cheque is also accepted.
2 basic things that they are currently doing that take little technical effort but quite some product management ‘will’:
a. Auto redirection to banking site: Unlike most other ecommerce sites, Flipkart never lands you on CCavenue page, you are auto redirected to the banks page where the info is required to be filled. Flipkart by-passes 1 unnecessary page by passing the required parameters directly to CCavenue and not through a user interface.
b. Banks Status: Flipkart maintains its own real time status if the bank’s net banking is working or not. So there are no surprises after you have chosen the bank and then go to the net banking page.
In the world of eCommerce, the players keep a standard list of products and then go out procuring it only when there is an order placed. There is no inventory on their end and there is no live status of inventory from their supplier. Remember The Alchemist, “Never Promise something that you don’t have”.
After placing an order, they would keep looking for the product at multiple places. After a week you might get a call saying that either the product is not available and we will do a ‘favor’ by refunding your money or if the product is there, it is not the color/size that you asked for.
Flipkart was no different in 2009, many customers used to get similar calls after days of ordering. But for the last 1 year at least Flipkart maintains its own inventory (or at least it seems so). They are selling what they have. From pure hearsay, Flipkart is taking up a big warehouse in Bangalore and is in talks for one in NCR as well. One of the few companies that is using the funding to build a business and not spend it like a FMCG company on ads
Flipkart is exploiting the delivery problem as a cashable need gap and building its own delivery backend. Flipkart is seen delivering through their own delivery boys in Bangalore and at times within 12hrs from order.
Flipkart has started putting fliers in newspapers in Bangalore with a product listing, call-to-order phone number and a promise of delivering ‘tomorrow’. This means more discoverability, no payment problem and no delivery delay.
Flipkart is looking to build its own courier company. The recent $20Mn funding from Tiger Global was only part of a larger sum they are known to be raising. Flipkart is looking to raise $100Mn at a valuation of $200Mn.
It is very difficult to sell a product which has been offered intentionally high to a middle customer in India. But then the customer is getting that offer at the comfort of their home. Any customer will like this and will pay the amount tagged by retailer. But how can this idea are promoted. Flipkart used Word of Mouth as their best marketing tool to sell their product. A satisfied customer tells others also about a good experience, and this how the business of Flipkart depends. Flipkart has been using different Social Networking Engines to promote their product. Promotions on Facebook, twitter and other social sites helps in gaining some attention, but to some extent, the rest has been done by Services offered by Customer.
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 world. Flipkart.com official Face book page has close to 9 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.
The message is very clear to make people more comfortable with Flipkart, to generate a great customer relationship and loyalty on the basis of great product prices and excellent customer service. All in all to create a great customer experience.
10. Pricing strategies
Without going into the theoretical and the management theories, pricing can be set on the following points:
1. Operating Margins – Essentially determining what the company earns to sustain business and turn a profit
2. Strategic pricing – Basically overall pricing strategy where some products are given at a higher discount in order to capture market share or consumer mindshare.
So individual product pricing can be higher or lower while the overall picture is kept in mind so that the company as a whole can sustain itself on an overall profits or deep enough pockets to work on losses for sometimes.
Price is optimized best when the overall cost to the company per product is optimized. So that means here the contributing factors have to be looked at and the costing there has to be optimized.
So looking at the major cost factors that affect the E-Commerce that are taken care of Flipkart:
1. Supply Chain (procurement and shipping):
Flip kart’s core competency lies in their Supply chain and logistics which has been perfectly monitored and managed by professionals. This involves a deep understanding of where the suppliers are and where the end consumers are so that when a customer orders a product, it can reach him by the shortest route in the shortest time and minimum manpower time being spent.
This also means that customer demand is anticipated and pre-emptive steps are taken so that products are ready to be shipped from the point closest to the consumer before he even places the order.
This helps in reducing the overall cost of moving the product to consumer’s place. The overall cost of Flipkart has been reduced to great extent, all thanks to Blue Dart, the logistics partner of Flipkart. It is so because the transportation cost has been reduced and therefore Flipkart is able to earn a reasonable margin on the sale of product, belongs to the actual producer
2. Manpower and time spent on each order:
We must understand that all operations have to be made sustainable and more importantly scalable for ultimate long term growth. So all process from what route a person takes to pick up material to how much time it takes to pack a product have to be looked at and it is when a company works toward optimizing all these processes that a company really starts to take the lead.
Competition is increasing day by day and by the end of 2015, there will be huge number of players in E-commerce in India. With the rise in Internet users, the numbers of e-commerce companies are also increasing. So Flipkart will definitely face tough fights in future and they should be ready for it. Snapdeal is currently the biggest competitor of Flipkart. Other close competitor includes Groupon, best deals etc.
12. Tackling competition
Flipkart’s website is great, easy to use, easy to browse through the products, add products to wishlist or to a cart, get product reviews and opinions, pre-order products, make payments using different methods, in short hassle- free and convenient.
Great Delivery system
When user places an order, the postal address has been tracked. And the order goes to nearest warehouse. And it is being packed, picked up and delivered by local courier company. The advantage of cash on delivery is no fraudulent activities or anything. When the item is delivered makes sure the item is there and then pays. And also user can track the routine of item through email. And the company informs about the status of item.
Great books and hot deals
Flipkart offers excellent collection of books, DVD’s, movies, electronics items, home appliances, and life style and health care products. Flipkart promo coupons and discount coupons are also available. One another feature of Flipkart is best deals and offers. When you place an order greater than 300 INR, you’ll get free shipping.
Excellent communication system
Flipkart is renowned by their relationship with the customer. If you are facing any difficulties getting the product you can contact them via telephone (like everyone 24/7), email or through website.
India is a hard place for delivering any item but Flipkart is managing to deliver the item in 2-3 business days. If the order you placed is not available don’t worry. The enquiry goes to nearest supplier and the item becomes available It will delivered within 24 hour. Flipkart is aiming to bring down the delivery time of regular orders to 24 hour. An excellent marketing strategy by Flipkart marketing team to increase the sales
Great customer retention rate
Flipkart’s reason of success is that it has a great customer retention rate, it has around 15 lac individual customers and more than 70% customers are repeat customers i.e. they shop various times each year. The company targets to have a customer base of 1 crore by 2015.
Credible and Easy Payment system:
Flipkart offers many modes of payment such as
Cash on delivery.
Also Flipkart offers 0% EMI on transactions made on credit card payment where the whole amount can be paid in 3 monthly installments without any extra charge. For installment greater than 3 months, a minimal charge is levied.
Flipkart Adds Online Wallet to Ease Payment Woes
Flipkart has added a new ‘Wallet’feature to enable customers store money in their Flipkart account and redeem it on future purchases. Flipkart Wallet works on a prepaid credit system: you can top up your wallet with any desirable amount up to Rs 10,000 by using any one of its regular payment modes like credit card, debit card, and net-banking. This amount will then be reflected as prepaid credit on your account and can be used as a payment mode for all forthcoming purchases on the portal. Expectedly, this amount will be deducted from the balance in your account’s wallet. Flipkart allows you to make a partial payment using your Wallet and pay the remaining amount using other payment modes like credit card, debit card, and net-banking. Flipkart does point out that cash-on-delivery payment mode cannot be combined with a Wallet payment. This is Flipkart’s way of bypassing payment gateway problems and also facilitates frequent shoppers
13. Pros and Cons of Cash on Delivery model
E-commerce works on the principle of negative working capital. In other words the vendor does not use his capital in procuring the goods rather uses your payments made in advance to procure the goods and deliver it. Let me take an example, just imagine you bought an iPad on line, and you paid for it using your credit card. Now the money from the credit card is debited immediately while the delivery of the iPad takes about a week or 15 days. Now most firms can procure faster and deliver but they take that extra few days as they retain the payment and can put it to other use or simply generate interest for those few days. This model was pioneered by Dell when they sold their laptops extensively through Dell Direct and it had worked very well for them earlier.
Now this model is under threat as consumers in India work on the cash on delivery model. Now in the global scenario Cash on delivery accounts for almost 15% of transactions according to a Nielson report. But in India it is almost 80%.
Apart from locking up working capital, cash on delivery also adds to the complexity of the supply chain. Plus there is an added threat as collection is done by the delivery agents and often there is an element of hazard while using external collection agents.
Despite these challenges “Cash on Delivery” has led to the boom in the e-commerce in India and does not look like the model is going away soon. So what can e-retailers do to sustain themselves in this environment?
1. Have cash on delivery (COD) only for select categories. Often using COD for all categories may not make logistical sense. Some of the categories like books etc may not need COD model. While electronics is something that COD model would work better.
2. Keep a minimum purchase limit for availing COD. Now I have had many experiences on setting limits and not too many people in India have been very happy with it. But in the US and Western Europe there have often been limits on setting OD facilities.
3. Start a small charge for COD, maybe a tiny amount to begin with but sooner or later the charge could potentially off set the working capital deficit.
14. Future strategy for Flipkart
Overnight successes usually last just that one night. Strategy has got to lay out a more forward-looking roadmap for a company that spans multiple years. To make things simple, lay the future out into three phases – Build, Pull Away and Transform. These do not need to – and indeed should not be – distinct phases but rather overlap each other to benefit from positive momentum that each phase builds and hands over to the next.
Build: A solid foundation is half the good work
In its first phase of transformation Flipkart must build deeper engagement with its customers. It needs to both build a deeper relationship with its buyers and provide those touch points that are more omnipresent than the web-based Internet.
Loyalty: It is strange that for a service that is not vividly distinguished from me-too, Flipkart chose not be build loyalty programs. Loyalty need not have just the old school implementation of co-branded shopping appliances like credit cards. Loyalty programs need to be deeper, where someone who has greater wallet spends at Flipkart feels rewarded both monetarily and – more importantly – otherwise. Flipkart Coupons is another loyalty device conspicuous by its absence. As gifting increasingly strives to put last-mile choices back in the hand of the recipient, a loyalty program based on redeemable coupons will deepen association with the customer. Corporations spend a lot of money in fine tuning their Rewards & Recognition programs to make them suitable for the young demography – a space that Flipkart can immediately capture (and since corporations buy coupons in bulk, a part of working capital management can also be taken off in the process).
Touch points: Ecommerce is shifting from the browser to applications that sit on devices. Flipkart can regain its first mover advantage by introducing iOS and Android apps that make shopping much easier than on native browsers.
Ring fencing customers and pampering those who return for more is crucial in the build-out phase. For years, Flipkart has focused on internal effectiveness and not so much on the customer and it is about time to change that. There is also an important mindset change that needs to happen at this phase – increasing value for not only buyers but also sellers who would benefit the most in having access to the Flipkart platform. The outcome of such thinking will play an important part in the late-second and third stage of this transformation
Pull Away: Inorganic growth and building the ecosystem
Exploit adjacencies: Having built a solid foundation where the customer has been placed at the focus of future planning (in addition to internal effectiveness, which Flipkart has always excelled in), opportunities in adjacencies need to exploited. Category expansion, which Flipkart has been at, is one way to provide buyers with all their needs on a single platform and leverage scale. There are adjacent categories however that have already matured into full-fledged businesses with similar – not exact – contours. Take travel for example. The basic fabric of the business is similar – acquire inventories from suppliers, build a technology platform for delivery, squeeze out a bit of margin and deliver the product by careful customer segmentation minus the added headache of physical deliveries. Standing where we are, categories such as these are too difficult to build grounds up for Flipkart. Hence an acquisition is the best route to increase momentum on the ecommerce flywheel Flipkart has already built and set in motion.
Build the ecosystem: When a business model has successful equivalents in developed markets, the role of a local strategist becomes easy – import ideas. How successful will a Flipkart handheld device or Flipkart Web Services become? What is interesting however is building a supply ecosystem where original creators are encouraged to participate on the platform without losing value to intermediaries. Authors are a very obvious target audience in this category, which itself has a very wide range encompassing text books, animated books, restored (and retold) classics, fiction, non-fiction, graphic novels – the list can go on. Besides the content, form has diversified significantly, thanks to bloggers and journalists. Developing relationships with producers directly (building the relationship is not entirely easy) and co-creating products increases the value of the Flipkart platform for those who were perhaps dis-intermediated or losing too much to make authoring a successful profession (‘authors’ has been u
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