Flipkart: Every Wish Will Be Fulfilled

Flipkart is India's largest online retail firm and has been providing a delightful experience to customers since late 2007.


Flipkart is India’s largest online retail firm and has been the poster child of the Indian consumer internet industry in the past decade. I have chosen this company as an example of effectiveness, because they have consistently delivered and scaled on what they have promised: “delivering more smiles per hour”. Started in late 2007, it ships 8 million units per month (as of February 2015).

It’s business model has evolved over the years. In the initial days the focus was on making customers in India cognizant of ecommerce as a reliable channel. With time the focus shifted on becoming an online megastore which is very highly preferred by shoppers. Lately, the focus has been on profitability while maintaining customer delight.

Similarly, the operations have also evolved to achieve the goals of the organization. Whether it be stocking almost everything in the inventory initially, starting cash on delivery to increase credibility, having its own logistics network, having in-house technologies for a lot of back-end and front-end functions, having 30 day replacement policy, shifting to a marketplace model in the recent years and heavily focusing on the mobile channel are the ways Flipkart’s technology and operations decisions have kept pace with changing organizational goals.

KEY OFFERINGS
KEY OFFERINGS

LET US ANALYZE MORE CLOSELY

INITIAL DAYS: GAINING CUSTOMER TRUST

In 2007, online retail’s contribution to India’s  retailing industry was practically zero. Flipkart’s idea in those days was to establish the reliability of its platform. To achieve the same, Flipkart started out with just books because they were easier to handle logistically and since they cost only $8-10, customers were more willing to try  this out. However, customers were not so conversant with online payments then. Thus, Flipkart took a decision of starting cash on delivery. This operational innovation proved to be pivotal in gaining greater customer trust.

THE TRANSITION: SETTING UP FOR SCALE

With the growing scale, the logistic partners of Flipkart were not able to deliver. To address the same, Flipkart established its own delivery network with last mile delivery capability. This operational ownership was crucial for scaling and maintaining trust. The business goal of becoming an online megastore required Flipkart to diversify into other categories and provide a hassle free shopping experience . This required greater supply chain technological capability. Flipkart developed its own ERP for greater control, transparency and customization. This allowed Flipkart to be more responsive to changing business needs. For a hassle free customer experience, initiatives such as a no questions asked 30 day replacement policy, same day delivery and scheduled time slot deliveries were institutionalized. To ensure a faster processing time in its fulfillment and logistic centers, automated assembly lines have been put for a lot of key processes. This has also allowed to improve operational efficiency along with improved customer delight.

 

SAME DAY DELIVERY GUARANTEE
SAME DAY DELIVERY GUARANTEE

 

IN A DAY DELIVERY GUARANTEE
IN A DAY DELIVERY GUARANTEE

WHAT’S HAPPENING NOW: FOCUSING ON REACH AND PROFITABILITY

For a greater geographical reach, Flipkart has expanded the number of warehouses in rural India. In addition, as a business strategy, Flipkart is acquiring companies to strengthen its operational muscle. It recently acquired a minority stake in MapmyIndia to strengthen its delivery network by using their map data and location technologies.

Flipkart has heavily invested in optimizing and delivering a hassle free shopping experience on mobile. Keeping in mind the slow data connectivity in rural areas  Flipkart launched Flipkart Lite, a progressive web app for the mobile site – the first of its kind in the world. Over the last couple of years, the focus has also shifted on becoming profitable. For the same, Flipkart has moved towards a market place model wherein its huge inventory costs have dropped significantly.

This constant alignment has allowed Flipkart to maintain a significant lead over its rivals such as Amazon and Snapdeal . This has also ensured that the industry as a whole innovates resulting in the customer being the ultimate beneficiary.

 

FLIPKART LITE
FLIPKART LITE

 

FLIPKART FUNDING OVER THE YEARS
FLIPKART FUNDING OVER THE YEARS

THE ROAD AHEAD

I believe that the operational and business strategies have an alignment since inception helping it to achieve a superior performance. This alignment will be crucial in achieving Flipkart’s goal of a 10x volume growth by 2017-18 from 2016-17. Having started in 2007, Flipkart is currently valued at over $15 bn. This has been achieved by shifting business goals to achieve the vision of customer delight always, developing operational capabilities to achieve the same and using technology as an enabler for scale and for integrating the myriad of functions which need to interplay to bring a smile on the face of the person who matters the most – the customer.

flipkart
THE ROAD AHEAD!! 🙂

 

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Sources

http://www.business-standard.com/article/companies/flipkart-sales-target-2015-flipkart-aims-to-double-sales-to-8-bn-this-year-115021201560_1.html

http://www.livemint.com/Industry/dqqxkrSUG0d86VEZ5wUNjN/Amod-Malviya–Technology-is-not-just-an-automation-tool.html

http://economictimes.indiatimes.com/industry/services/retail/how-ecommerce-giants-like-amazon-and-flipkart-are-piloting-rural-distribution-model-to-cater-small-town-customers/articleshow/47635478.cms

http://bits.blogs.nytimes.com/2015/11/09/with-an-app-like-mobile-website-flipkart-takes-a-swipe-at-apple/?_r=0

http://www.thehindu.com/news/cities/Hyderabad/flipkart-to-turn-profitable-in-2-years/article7823301.ece

http://www.in.techradar.com/news/Flipkart-launches-quicker-refunds-for-cash-on-delivery-returns-via-IMPS/articleshow/48745853.cms

http://www.livemint.com/Companies/R1jgiGdIcc57dUvMTXutqL/Flipkart-in-talks-to-invest-in-firms-to-boost-supply-chain.html

http://retail.economictimes.indiatimes.com/news/e-commerce/e-tailing/flipkart-launches-fulfillment-centre-in-chennai/48957851

http://st1.bgr.in/wp-content/uploads/2014/04/flipkart-same-day-delivery.jpg

http://i1.wp.com/www.indianweb2.com/wp-content/uploads/2015/01/flipkart_delivery.jpg?resize=700%2C340

http://www.couponcandy.in/wp-content/uploads/2015/10/flipkart-ad-768×1024.jpg

http://www.medianama.com/wp-content/uploads/Flipkart-Fund-Raising.png

http://techlomedia.in/wp-content/uploads/2013/12/flipkart-one-day-delivery.jpg

http://www.mbaskool.com/hwdphotos/uploads/64/9/esbf3yu82rquca.jpg

 

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8 thoughts on “Flipkart: Every Wish Will Be Fulfilled

  1. Good to know the competition faced by dominant players in emerging markets!

    1. Yes Srinidhi, Flipkart with its constant focus on customers and evolving strategies to support that focus has created a great value proposition for the users.

  2. Why benefit does having own ERP etc have over having shared ERP? It would have saved a lot of money for Flipkart

    1. Pratik, have its own ERP allows the following advantages to Flipkart
      – Greater customization and control over the supply chain
      – Able to be much more responsive in fixing bugs/getting initiatives to the market
      – Lower operational fees (which otherwise would have been high had Flipkart bought 3rd party ERPs)

      These three in combination warrant having one’s own ERP.

  3. This is a great article about the India’s largest eCommerce company. Thank you for the writing.

    Many actions taken by Flipkart seem quite familiar to me because it might borrow some idea from Amazon, like fast delivery and 30 days warranty. I am curious about the penetration of Flipkart in Indian market – is it the dominant player in the country? or there are some competitors that can threat Flipkart’s position in any time?

    In Korea, we have a company which is quite similar to Flipkart.(Maybe Flipkart is much bigger in size though…) The name of the company is Coupang, and the company’s valuation exceeds $5 billion, so the company is called as “Korea’s Amazon”. (This company is founded by two HBS students, and one of them is now an EC this year.) However, one-day delivery costs a lot of money, which made this company in the red for a while. How the company maintain profitability while continuing these one-day delivery and 30-days warranty? It is possible with economy of scale? I am curious. 🙂

    1. Thanks for the comment Ryan!
      As per March 2015 Flipkart controlled 44% of the Indian ecommerce space with Snapdeal at 32% and Amazon at 15%.
      These are tough competitors but I believe Flipkart with its strong alignment between strategy and execution will remain the market leader.

      In normal circumstances one day delivery is charged, and hence the initiative does not reduce the profit margin. As far as 30 days warranty is concerned, that helps in maintaining the trust of the consumer which is far more important. I also believe that with its growth trajectory Flipkart will be able to dictate terms and does so with certain brands/merchants regarding the return of these products back to the brands.

  4. Very impressive, not just for its performance, but the way how company built up its relationship with customers.
    My impression is, Flipkart has a better understanding of the local market against its international competitors such as Amazon.
    However, what I’m more curious is, there must have been other competitors that were trying out similar services at the time. How did they fend off these competitors. To be more specific, the service could be copied by the competitors (cash based service etc.), especially by the local competitors. Was it the scale of ammunition (i.e. funding/cash) they had or was it other elements that lead Flipkart to be better than its local competitors?

    1. Go, thanks for your comment. As far as replicating the service is concerned the other competitors have not yet started their own supply chain – this is a huge differentiating factor. In addition taking cash on delivery, needs a 3 way reconciliation at the time money comes to the delivery hub. Flipkart with its own ERP, supply chain and greater leverage with logistics partners has been able to achieve a very good process around that. I would not say that the other two competitors do not access to funds, i think it comes back to the long term focus that Flipkart has for the Indian e-commerce industry and the kind of knowledge base that it has developed over the years.

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