Flipkart

Consignment model (thus trust and customer delight is kept in mind) It s a pure play business model Cash on delivery model worked best because in India no much penetration of credit card n debit

cards Initial marketing is word-of-mouth; still the same is worked on. According to Alex traffic ranking its among the top 30 website in India. Funding Started with 4Lacs Then added two venture capital in 2009(Accel india) and 2010(Tiger Global Management)

M&A

2010 – weread 2011 – Mine 360, chakpak.com 2012 – letsbuy.com They introduced electronic wallet in 2011 They introduced Flyte digital store (similar to itunes)

Cash on delivery

The COD should be more than 50K EMI – min 4K period is 3 or 6 months If in 72 hours the rate decreases then the extra money will be paid back

COD Target

Students / people with no debit and credit cards Geographically small town people

3 pillars

Website to get queries and orders Suppliers – book distributor Logistics – courier service tie ups

USP

Usability Support

Model is partnership with local book vendors

Customers

Price sensitive Experimental shoppers

Trust is the most need full thus their first product was books cheap and easy to delivery.

STP

Segmentation:

All internet users and shoppers

Target:

Flipkart concentrates on more Psychographic, which helps in deciding where to display ads online

They target online shoppers and people who don’t online shop (thus TVC to encourage them)

Positioning:

Customer delight (low price, free shipping, replacement of faulty products) No kidding no worries Online megastore One stop solution

Marketing Strategies:

Word of mouth (initial marketing even now they want to satisfy customer so they come back for more)

Good use of SEO “We DONOT 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” Thus when you search free ebooks or pdf books old or used books flipkart will be displayed. Good use of SEM Ads at proper places and use pay per click to pay for ads Very easy web interface Payment convenience

o Cash/card on delivery – there by encouraging students and people with no credit/debit card to purchase in flipkart, with mobile internet penetration there is chances of capturing rural market (60% revenue by COD)

o EMI – two types of installments (3 / 6 months) there by targeting price sensitive customers

o Wallet – customer can recharge money online and purchase then and when needed those entering details always is rectified, target heavy purchase and luxury customer

Customer conversion rate is so high more than 70% Personalization of the user page Product recommendation with your previous purchases

Poters 5 forces

Bargain power of suppliers (low)

The readers are reducing thus suppliers are in weak position Inventory turnover is lower, thus more inventory again flipkart is at the upper hand

Bargain of buyers (high)

Not many buyers Best deals online Cash on delivery One stop solution Faster delivery with free shipping cost

Threat of New entries (high)

Market potential for this industry is high Low entry barriers, but sustaining is tough

Threat of substitutes (Low)

Diminishing brick and mortar model Increasing customer ease and customer satisfaction

Industry rivals (Medium)

Many small players (snapdeal, naaptol ..) Entry of international players like Amazon into India

SWOT :

Strength

Top Indian ecommerce portal

Diversified into electronic goods Two VC investment to build its own delivery system thereby reduce delivery time Cash on delivery which is making 60% of its income

Weakness

Coordination with suppliers and courier was tough Price biasing to maintain the margins ( eg. Low price for the best seller book and more price for

the least wanted) 24/7 customer care, thus even mid night is to delivered within 24 hours

Opportunities

Already working towards customer delight will obtain customer loyalty gradually Supplier database interface with flipkart website for JIT procurement Mobile internet usage is increasing there by chances of increase in sales through mobile

shopping.

Threats:

Small players and emerging competitor Major players like Amazon In capabilities to manage certain costs like delivery cost, bank charges

7 P’s of marketing

Product :

Appearance – the ease in the website interface even for the first visitor Quality – checking of the product before packing (visual test) Packing – different packing(eg. Bubble pack for electronic items) Brands – all brands integrated in one website Warranty – one year warranty from the manufacturer’s side Service & support – guarantee delivery of undamaged product or else replacement in 30 days

Price:

Special discount As shipping is within India the shipping cost reduces Seasonal discounts Free shipping For expensive products transit cost is borne by company

Place:

Tie ups with local vendors and courier firms (thereby avoiding octroi charges) Company owned warehouse in major cities near airport Trying to achieve minimum returns If the courier can’t delivery to the location the product is shipped through government post

Promotion:

SEO and SEM Word of mouth marketing TVC lately to encourage non-online shoppers More online marketing like FB, Twitter, linkedin Hiring people with high sense of ownership, generalist with more attitude to learn

Packaging:

Different packaging for different product to ensure safe delivery Flipkart the name goes with the online cart Design and packaging is common so customers can relate it to the company

Positioning:

Customers feel Flipkart is cheap, on time delivery, replacement; the online myth is gradually eradicated

Competitors see Flipkart as the market leader, with the acquisition of letsbuy.com General public want to try it once for its creative TVC is making people curious to experience

flipkart

People:

Service people, Sales Clerks, Delivery drivers, Managers, Complaints department, Accounting, Warranty people, Technical people, all work for the customer ease, customer satisfaction and customer delight.

Risk matrix

MARKET RISK

Frequency Impact Cost of mitigating risk

Strategy to mitigate risk Benefit of mitigating risk

Credit Risk low moderate low Credit risk will include Employee Supplier Customer

Employee training cost is bearded and this risk is very negligibleSupplier relationship is maintained thus this risk

This will improve the good will of the company and customers will not have out of stock very often, also good service from the company employees will

is moderate , as many products are out of stock( thus suppliers has to be increased)Customer, (COD, EMI) is a credit risk however the terms and conditions take care of it ( minimum COD is Rs. 50k …)

give customer delight.

Interest Rate Risk

Moderate Extreme Medium The funding is from the VC with a high interest rate within 5 year 4 round of VC funding, thus the frequency is moderate till the IPO, and also the interest rate will keep increasing based on each round.Assuming it is not profit sharing VC

Mitigating this risk will lead to more profit to the company than paying interest or sharing profit with the VC

Currency Risk Low Low Low They are not in international market. Become a market leader in local market and then expand globally

Equity Risk Low Low Low It’s still a private limited company

Commodity Risk

High Low Low Goods in the inventory may be purchased for a higher price than the current market price; this loss has to be bared. So JIT inventory can be maintained. Direct procurement from the supplier (already working on it) however if they build their own inventory still JIT has to implemented or demand can be forecasted and good can be stored (managing the demand)

They can save cost and make profit if they can procure goods at lower price and can offer discounts too (still they will be making profit) there by attracting price sensitive customers.

Refinancing Risk

Low Low Low As they are making immense profit and are growing at a high pace. They can repay their

Thus they are at a better financial status

principle to the VC by refinancing .There will not be a increase in rate of interest as its VC and they share profit

Liquidity Risk Low Low Low They are a working in buyer-seller model thus the risk of liquidity is low as the assets can be sold in market .With a profit of Rs 750 million for FY 2010-2011 and internet user increase by 20% (source :times of India ) online shopping sites is a emerging market with lots of market potentials

The benefit is that if there is liquidity the assets can be sold in the market and the liabilities will be paid.

Legal Risk Low Low Low As all the products are guarantee and warranty from the manufacture is also available online digital music rights are also obtained

This will gain the trust on the customer and also legal clarity of the company from the government’s point of view

Political Risk Low Low Low As of now there is only Tax risk for the company. The government of India ecommerce laws will not be changing for another few years however there is a risk of change in tax

If the tax changes there will be a change in value of money so there will be no much benefit as the value will be the same.

Reputation Risk

High Extreme Moderate Customers are in direct contact with the company and co-customers of the product, thus reputation has to be maintained.FB comments has to improved, the cost of hiring employee to work on it should be bared. Also a flipkart shopping social network can be started for customers to interact with each other (as user reviews have become common)

Customer base will increase there by more revenue and more reputation and more customer satisfaction.

suggestion of their friend (FB, Gmail) can be prompted to encourage customers to buy products.

Volatility Risk Moderate Low Low As the companies funding is solely from VC there is very less risk of volatility

Thus the underlying assets are safe and value doest change often.

Settlement Risk

Moderate Extreme High As there are different modes of payment there is a risk of settlement that customer won’t pay after delivery , however terms and conditions are applied before every payment thus there is a precaution already taken(COD, EMI, Early cash online )

The credit period will be maintained as expected so no extra loss needs to be beard.

Profit Risk Low Low High The profit is solely from ecommerce there are different products like books, cell phones, camera etc. however their planning to add more products. Gifting can be one diversification as they already have the delivery model in place for few cites.Also there are more online users this leads to more online shoppers also VC funding for building delivery system for the company.

As there are more products to sell there is profit diversification, thus profit doesn’t depend solely on one products life cycle or one customer base or particular delivery model.

Systemic Risk Low Low Low As their funding is through VC there is no systemic risk as no involvement of bank funding.

Operational Risk

Moderate Extreme High The operational business process that are going wrong are

Social Media

This will pour in more customers. This will bring in rural and mobile

relationship Delivery delays

Delivery delay can be corrected with the building of new warehouses at regular distance across the country starting with one at capital of each state.Social media relationship can be reduced with a department solely of social media marketing/ online/ mobile marketing.

users are a new target to work on. Delay in delivery will bring more repeated buying and more Word of Mouth.

Unable to find the financial reports of flipkart.

Frequency:

Low – 1% (1% to 33%)

Medium – 50% (33% to 66%)

High – 99% (66% to 99%)

Impact:

All impacts are financial risks

Low – Negligible

Medium – Moderate

High – Extreme

Industry Analysis:

Economic Factors:

The raw material procurement is a problem as lots of items may be out of stock, for this the number of suppliers must be high and proper demand forecasting is needed. Profit strategy is to be maintained. Discounts in the most popular products will attract more customers for online shopping and a slight increase in price for other products won’t be visible to the mass customer target. Flipkart doesn’t offer substitute products. Tie-ups with whole seller and the product manufacture itself for the product procurement. This way there can be discounts. Flipkart has tied up with 15 courier companies.

Supply and Demand

In this online shopping industry the demand is increasing and there is only minimum trusted ecommerce website, and one among them is Flipkart. Thus venturing more into this industry is worth the risk as there is large market potential. Flipkart works on their demand forecast then a bulk order from the supplier and store in the warehouse which is replenished for every 24-48 hours.

Competitors:

In this industry the number of competitors is low. Also flipkart’s acquisition of letsbuy.com reduces the competition even more. However it’s not that due to less competition the price of product is high because it’s a preconceived notion that online prices are lesser than available in physical stores. Flipkart competitors will include infibeam, rediff, indiatimes, indiaplaza, ebay, amazon, olx, future bazaar, jungle.

Future Condition:

This industry is in the upswing phase of the business cycle. Thus more competitors will enter into the field to make profit. For instance Amazon.com is entering into India which will be a major threat to Flipkart. Also as more customers are changing to shop online there will be an increase in the customer target for this industry. Also the advent of mobile internet made it easy to target the rural mass of the country too. Flipkart wants to venture into every product except grocery and automobile.

Market share is

Indian ecommerce market is worth 47k crores (source :trak.in ) major ecommerce from eticking

Flipkart revenue in 2011 is 10 million that is approximately 50 crores

Thus market share is 0.10 %

Ad Campaigns:

Primarily flipkart worked on online advertising

SEO (most effective) SEM (pay per click) Facebook (needs better handling) Twitter

Print media ads,

Delivering happiness

Comics print ad

TVC:

Fairytale

http://www.youtube.com/watch?v=Xrf6z4UWLyM

No kidding No worries

http://www.youtube.com/watch?v=eNrjHvGerLY

http://www.youtube.com/watch?v=XlwcftfHzL0

http://www.youtube.com/watch?v=qCnIIAWUcRg

http://www.youtube.com/watch?v=Fq2jCV_QsEA

http://www.youtube.com/watch?v=iHVtN6yvWhI

http://www.youtube.com/watch?v=4pKAkrK1keY&feature=fvst

Flipkart’s initial marketing was word of mouth Their initial target was the internet users, as they will be open and trusty toward the internet

shopping The print ads were initially campaigned under the tag line “delivery of happiness” with happy

doors as they are the initial point of contact between flipkart and its customers. The comic ad is in relation with the comic con festival TVC is to appeal to the non online shoppers to encourage them to experience flipkart In TVC the first campaign was about fairytale to encourage book lovers The second campaign was “No Kidding No worries “where kids are depicted as adults to bring

the trust and innocence as kids are the symbol of trust. Which became a great success campaign and most talked about.

There are Flipkart ad boards on the airplane behind every seat.