This presentation takes account of exponential progress of Flipkart and identifies some of the weaknesses in its business model. Further it suggests some Strategic actions which could be taken in short term and in long term, to make itself profitable

1. By
Pavan Wadhonkar

2.  Market leader in E-commerce:
- Market share more than 33 % with Amazon at second position with 18 % market
share
- Currently valued at more than $ 5 billion
- Started with just Rs 4 lac initial investment in 2007
- It made Rs 6000 crore or $ 1 billion in revenue in 2013–14
- It is a significant jump from Rs 1,180 crore the company reported in
2012-13 and Rs 205 crore reported in 2011-12.
 High Prospects:
- The company’s promoters believe that the business could be worth
$100 billion over the next five years
- Indian e-commerce industry is expanding at a rapid scale, and
flipkart has shown potential of leading this market expansion

3. Before recommending economic and business strategies we will first see the
strengths and weaknesses of Flipkart.
Strengths:
 Industry has shown tremendous growth (49% from 2007 to 2011) and
continues to grow at high rate. According to a Deutsche Bank report, the
industry would grow at a CAGR of 10% to reach US$111 billion by 2020
 FlipKart itself has grown very fast increasing its revenue 2.7 times in fiscal
year 2012-13 compared to previous year
 Has confidence of the investors with recent investments of $ 1 billion from a
consortium of investors
 Not heavily dependent on courier services, have developed delivery network
 Customer services and exception warehouse delivery system
 Variety of payment options, making it convenient for customers to order
 Strengthened CoD options through partnership with Ekart
 Features among the top 30 websites
 Concentration on customer satisfaction, logistics and distribution
 Wallet (prepaid) feature is introduced to make online shopping easy and
increase customer’s switching cost

4. Weaknesses
 It had losses of Rs 281 crore in the fiscal year 2012-13
 CoD option is not as successful as anticipated
 The size of business is still very small compared to foreign
counterparts. This will create problem if entry of foreign
players is allowed in the Indian market
 It takes time to build confidence among the customers in
the internet business where feel of the goods and
exchange cash has been a norm in the market
 Average transaction value is low as the customers still
prefer traditional stores for expensive purchases

5.  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.
 Now we will see these steps in detail -

6.  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.
 Flipkart Coupons is another loyalty device conspicuous by its
absence. 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.

7.  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

8.  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.
 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.
 Hence an acquisition is the best route to increase momentum on the
ecommerce flywheel Flipkart has already built and set in motion.

9.  Build the ecosystem: When a business model has successful
equivalents in developed markets, the role of a local strategist
becomes easy – import ideas.
 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.
 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.
 . For example, this can work as well for art and handicrafts as it will
for books).

10.  Inorganic expansion and building ecosystems should herald a
different thinking process for Flipkart – a line of thinking that
transforms the business from being a service providing ecommerce
to becoming an electronic marketplace and platform.
 Platform companies (Eric Schmidt named Facebook, Amazon, Apple
and Google as the ‘Gang of Four’ Platform Companies) are ones that
come with a core and then combine complements from a variety of
other providers to add disproportionate value to the service.
 Platform companies are difficult to build but once done (and there
are important technology and business considerations) are in the
long-term more successful than pure-play product or service
players.

11.  The vision for a transformed Flipkart is where Flipkart is a platform
inviting multiple entities to participate not only as part of the supply
chain, catalogues and consumption but most importantly in
innovation.
 Think of it this way: where in a fast-forwarded world Flipkart is a
platform for providing online education content to a vast majority of
institutions in India
 On the same platform innovators will bring newer ways to present
the content and perhaps another participant will make learning more
social.
 Leveraging scale becomes easier for a platform company.

12.  The same (or very closely related) content for education could be
as applicable in Southern Africa as is it is India, opening up
immediately vast business potential. The true unlocking of scale
can easily happen in a world where Flipkart is a platform rather
than an ecommerce service.
 A large-scale program that takes a product or service company
and transforms it into a platform play is not simple. For some it
could be a life’s dream. But it certainly is a dream worth living.
For a company like Flipkart that has already transformed the
ecommerce market in India, this could be the second calling for
a chance of inclusion in history’s wall of fame.

13. • Enhance mCommerce capabilities
• Build applications and/or website for mobile platform o Develop and
include mobile payment as one of the payment options
• Increase market reach o Target the young. Connect with the young
generation through a robust social media presence
• Enter the untapped market of tier II & III cities
• Do away with 35% dependence on courier services and build an
independent logistic/ delivery network as it is one of Flipkart’s
competitive advantages

14.  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.
 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.

15. • Educate people to make a safe online payment. Tie up with banks to
simplify the payment procedures and make them more trustworthy
• Price high value products more competitively to encourage its
purchase, which would increase the average transaction value
• Acquire small players operating in niche areas
• Treat suppliers as partners but make only short term contracts, as
the customer behavior towards a product can be very transitory
• Use predictive analytics to predict a product’s demand in the future.
This is important as Flipkart follows an inventory-based business
model and they need to keep their inventory in line with the future
demand
• Increase the switching cost for the buyers by offering them heavy
discounts and exclusive offers through online wallet facilities
• Tie up with traditional retail stores to leverage their trust and
collective reach in the market

16.  FLIPKART.COM - THE SUCCESS SAGA
http://www.ukessays.com/essays/marketing/product-and-brand-management-strategy-for-flipkart-marketing-
essay.php#ixzz3ABmoEZ9t
 Flipkart company analysis and strategic & tactical recommendations
http://www.slideshare.net/jhasumit/flip-kart-company-analysis-and-strategic-tactical-recommendations
 Flipkart sees slowing sales growth, still sells $217 million worth of stuff in 1 year
http://www.techinasia.com/data-flipkart-sees-slowing-sales-growth-sells-2174-million-worth-
stuff-1- year/
 The Growing Pains of Indian E-Commerce: What You Need to Know
http://www.forbes.com/sites/morganhartley/2013/01/24/the-growing-pains-of-indian-e-commerce-
what-you-need-to-know/
 How E-commerce Companies are losing Out in India?
http://thetechpanda.com/e-commerce-companies-losing-india/#.Uwlqmc46vak
 Study of “Flipkart.com”: India’s Leading E-business Portal
http://www.slideshare.net/probikersagar/study-of-flipkartcom-indias-leading-ebusiness-portal
 Flipkart valuation of $5 billion: 10 things to know
https://in.finance.yahoo.com/news/flipkart-valuation-of--5-billion--10-things-to-know-
103540895.html
 Is Flipkart worth $5 billion?
http://www.business-standard.com/article/opinion/is-flipkart-worth-5-billion-
114071500587_1.html