FlipkartA study of the e-commerce industry

Group V

Aritra GangulyPiyush Srivastava

Rahul BansalRajat Sood

Sonal RawatGaurav Jain

 

VisionTo become

‘Amazon’ of India

MissionProviding a delightful customer experience

Customer Obsession

Communication & Ownership

Innovation

Honesty & Selflessness

5 7 17 18 22 27 32 45 51 60 90 123 155213

302350

438547

684

854

1,068

1,042

1,059

1,076

1,093

1,110

1,127 1,1431,159

1,174

1,1901,205

1,2211,236

1,2531,270

1,286

1,303

1,3221,342

1,3621,383

Internet usage (in millions) population (in millions)

Effect of Internet base & stable population

Impact of Smartphone market growth and internet rates

Smart phone market; 155

other phone users; 18

89.5% of mobile internet users are accessing the net through smartphones -> internet on the go, from anywhere, anytime.

15 Aug 1995 – Internet started in India2004 – 256 kbps speed2007 – ‘Year of Broadband’2010 – 3G2014 – 41% of ecommerce

purchases are through mobile phones

2009 2010 2011 2012 2013 2014 2015 2016 ( E ) 2017 ( E ) 2018 ( E ) 2019 ( E ) 2020 ( E )

3.80 4.405.94

8.02

12.60 13.6016.00

20.00

25.00

31.25

39.06

48.83

e-commerce industry in India

e-commerce

In $ billion

Industry forces

Rivalry

Threat of new

Entrants

Bargaining Power of Buyers

Substitutes

Bargaining Power

of Suppliers

Low

Many providers for same product, with nearly zero switching costs for customer

High

Plethora of options for the

buyer has led to a culture of comparing

before buying

High

Extremely low BTE; only need a domain name and tie ups with suppliers

• Govt is contemplating FDI in online retail too.

• Industry is booming• Delivery sites for physical

stores is a new challenge

Low

Competing with brick & mortar stores, most of which

cannot match prices or delivery

• Only certain product categories like

personal care or perishables might be preferred at offline

stores

Profit Pools for E-Commerce industry

Teleco

m servi

ces

Teleco

m Equ

ipmen

ts

PC Acc

esso

ries p

eriph

eral in

dustr

y

Packa

ging

Indus

try

Courie

rs0%

20%40%60%80%

100%

2013 Market Revenue(Crores)

2013 Operating Profit( Crores)

Teleco

m servi

ces

Teleco

m Equ

ipmen

ts

PC Acc

esso

ries p

eriph

eral in

dustr

y

Packa

ging

Indus

try

Courie

rs0%

20%40%60%80%

100%

2014 Market Revenue(Crores)

2014 Operating Profit( Crores)

Buying pattern on different shopping channels

https://www.pwc.in/assets/pdfs/publications/2015/retailers-and-the-age-disruption.pdf

Reason for Buying online

https://www.pwc.in/assets/pdfs/publications/2015/retailers-and-the-age-disruption.pdf

Delivery Channels Options

https://www.pwc.in/assets/pdfs/publications/2015/retailers-and-the-age-disruption.pdf

•Internal Delivery/logistics channel like eKart, Amazon

•Third party delivery channels like Courier services (DTDC, BlueDart)

•Use of Indian Post Services

E-Commerce site Traffic Source

FlipkartGoogle India 28.6%Google.com 10.3%

Amazon IndiaGoogle India 19.6%Google.com 9.6%

SnapdealGoogle India 20.3%

Flipkart 10.4%

JabongGoogle India 13.7%vcommission 13.0%

Daily Pageviews

Pageload time

13.90

3.36

12.9

2.29

6.60

3.40

3.2

2.19

Flipkart Amazon India Snapdeal Jabong

Flipkart; 1.3

Amazon

India; 1.2

Snapdeal;

0.592

Jabong; 0.29

Monthly revenue(in $ millions)

How are they surviving?

http://www.livemint.com/Companies/VXr8oJzNJ4daOYSO5wNETN/Inside-Flipkarts-complex-structure.html

Flipkart Pvt Ltd

Flipkart Marketplace Pvt.

Ltd

Flipkart India Pvt. Ltd

Flipkart Internet Pvt. Ltd

Flipkart.com

Digital Media Pvt. Ltd

Digital Management

Services Pvt. Ltd

Flipkart Logistics Pvt. Ltd

Flipkart Payments Pvt.

Ltd

Flipkart Payment Gateway Services

Pvt. Ltd

Elements of Strategy

Arena

Product categories Started with Books, then music and mobiles and now Home

Category. Around 70+ categories with 30mn products Channel

Web-based & Mobile App - 70-75% of our total traffic is already coming from our mobile app

Also Opened “Experience Zones” Value Creation

COD with 30 day replacement

Vehicle

• Acquisitions• Mime360, a unit of Mallers Inc. - exchange platform connecting content owners with

content publishers. • Letsbuy.com (2010)• WeRead (2010) - social book discovery tool• Fashion Brand Myntra to get foothold in fashion category• Flipkart plans to invest in or acquire more than 15 start-ups• AdIQuity Technologies Pvt. Ltd - mobile advertising firm • DSYN Technologies – DSYN has a product called Appiterate that helps clients increase

downloads of their mobile apps and drive higher spending on apps by targeting users more efficiently.

• Stake in the marketplace and auctions startup WeHive Technologies Pvt. Ltd. This acquisition will help Flipkart increase its market dominance by scouting for mobile-focused companies.

• Invested in payment gateway and mobile marketplace ngpay and Jeeves Consumer Services Pvt. Ltd, which provides after-sales services on large home appliances and electronics.

• Marketplace Model• 3000 sellers till 2013 expected to grow to 100,000 by 2015 year end.

• Alliances• Exclusive tie-up with Mobile companies like Xiaomi and Motorola.

Staging Funding and Capital Investment by VCs, valued at $ 1bn. Human Capita lncreased to 33,000 First e-comm site to go App only for its Fashion Brand, “Myntra”. Started its Brick and Mortar store, getting into Offline retails as well. Network of 30,000 vendors started within a year

Economic Logic Lowest cost through scale advantage

Flipkart has its spread across the country and with revenue of $ 4500 mn.

Target to reach GMV of $ 8 bn by end of the year 2015, current GMV $ 4bn.

Flipkart ships about 8 million units a month. Flipkart had already gone past competitors, with the company valued at

about $12.5 billion Moving to Market place model also helping in reducing the storage cost

and leveraging the competitive price given by sellers.

Differentiator Price

BigBillionDay sale, providing products at the cheapest price possible. On going various deals on Mobile Phones and Fashion products. Free Home delivery thus reducing the price for customer even further.

Product Reliability Safe online transaction and COD 30 day replacement for all the products sold by Flipkart

Customization Mobile App provides real time chat with friends to decide upon the purchase.

Speed to Market Moved to market place model and have around 30,000 sellers The homegrown e-tailer is also rolling out financial assistance, to the tune of

Rs 50 lakh, for merchants to help them scale An amazingly well-oiled warehousing and delivery system

But there is no data yet to show that Flipkart is differentiated in any way with respect to their competitors

• Supplier• Quality Check• Pre- Packaging

Inbound logistics

• Inventory Management• Physical Placement on ShelvesWarehousing

• Order Processing • Product Distribution• Final Packaging• Placement in Delivery Hubs

Outbound logistics

• Shipping, Tracking and Reporting• Returns• After sales service

Customer Service

The Value ChainDirect sellers go straight through to outbound

The Supply Chain

Performance Review System The first e-commerce player to roll out such incentives that go beyond the statutory

requirement

Continuous six months unpaid leave for a career break or personal loss Leave for birthday and anniversary celebrations.

Extra to the usual list of declared holidays, casual or sick leave (12 days), annual leave (18 days), and declared holidays.

Free guidance from professional experts in regards of personal life, career development, work-life stress, legal and financial issues.

All employees will be facilitated business class travel during official work, if the board time is more than six hours. Applies to all Flipkart professionals and not only the top management.

Extended maternity leave of 24 weeks plus four months of flexi-working hours with full pay, and, if needed, one-year career break without pay

Flipkart Investment vs Revenue

2010 2011 2012 2013 2014 20150

1,000

2,000

3,000

4,000

5,000

6,000

7,000

http://trak.in/tags/business/2014/06/04/top-10-indian-e-commerce-sites-comparison/http://www.business-standard.com/article/companies/flipkart-sales-target-2015-flipkart-aims-to-double-sales-to-8-bn-this-year-115021201560_1.html

Mapping Site visits to Mobile Internet Population for Flipkart

2011 2012 2013 2014 2015 2016 ( E )

2017 ( E )

2018 ( E )

2019 ( E )

2020 ( E )

0

200

400

600

800

1000

1200

1400

1600

1800

2000

http://www.firstpost.com/business/corporate-business/its-not-electronics-flipkarts-fastest-growing-product-category-will-surprise-you-1966563.html http://www.forbes.com/sites/saritharai/2015/05/18/indias-largest-e-commerce-firm-flipkart-valued-at-15-5b-its-sachin-binny-bansal-billionaires/

Flipkart’s Big Billion Day

Amazon’s Great Indian Festive Sale

28% voted in favor Poor logistics Numerous complaints from sellers

and buyers despite 19,000 delivery boys across

20,000 Pin codes 5 million downloads of app 70% sale traffic from app

53% voted in favor 4x boost over last year (claimed)

200% traffic increase 15 minutes earlier access to top deals

Cash back on HDFC cards App-only deals on 16, 17 October

Sneak peak of deals

economictimes.indiatimes.com › Industry › Services › Retailhttp://indianonlineseller.com/2015/10/flipkart-vs-amazon-vs-snapdeal-this-diwali-who-are-you-rooting-for/

2011 2012 2013 2014 20150

20

40

60

80

100

120

49

1422

50

3.4 4.8 4.7 4.4 6.3

2535

51

73

105

20.918.9 17.0

14.7 13.2

Registered Users (in millions)Reg User buy RateVisits/month (in mil-lions)No. of Visits/ Purchase

The Ugly Truths

Launch of Flipkart

First

Fake Discounts

App crashes

Error 404

Way Forward? Flipkart has long been the Golden Boy of Indian startups, but they cannot

continue to bank on it for their business

Tough competition from Amazon & Snapdeal in terms of service means they need to crack down harder on mistakes

Technical faults at every mega-sale needs to be addressed

New avenues for Customer retention and conversion of new to loyal customers

Emphasis to develop a product/service unique to Flipkart, along the lines of Amazon’s Kindle.

Reduce dependence on Mobile Phones, Electronics and Clothing segments for most of their business