INTRODUCTION• Flipkart – One of the leading Indian e-commerce companies headquartered in Bangalore, Karnataka• Founded by Sachin Bansal and Binny Bansal in 2007 with 4 lakhs funding• Raised two rounds of funding from Accel India and Tiger global management• Early focus on online sales of books and later expansion of product line• Offers multiple payment methods• Path Breaking Services• Among the top 20 Indian Web sites in terms of traffic• Regarded as the Amazon of India
ACQUISITIONS• 2010: WeRead, a social book discovery tool• 2011: Mime360, a digital content platform company• 2011: Chakpak.com is a Bollywood news site that offers updates, news, photos and videos• 2012: Letsbuy.com is Indias second largest e-retailer in electronics for an estimated US$ 25 million
Initial Challenges (1/2)• Bad Experience of Indians with online shopping in the past–1. poor experience with the product2. late shipping3. poor customer service• Not an easy segment to break into, people were very particular in paying money for something which they had not seen and received.
Initial Challenges (2/2)• Skeptical about security of online transactions
Flipkart building Trust• COD• 24*7 Customer Service• Never Promise something that you don’t have – it built its own inventory• Delivery – its own courier company• No-Questions-Return policy and 30 days replacement policy - A recent study has found that 89% of online buyers say return policies influence their decision to shop with an e-tailer
Right Timing helps!• Indian railways – www.irctc.co.in played a big role to its success.• Internet boom in India and growing internet base/users in India.• Not much competitions in the market.
Growth Story…Started with books and went on toadd new products2 employees, 2 suppliers to 4800employees and more than 600suppliersHave their own internal courierservices called flipkart logistics
Why Books were the first choice?• Lower transaction size• Better Shelf size• Shipping and handling of books is easy• To emerge as a pioneer in book retailing rather than venturing comparison shopping engine
Competitors in book market5 sites cheaper than flipkart to buy books• Uread.com• Simplybooks.in• Bookadda.com• Landmarkonthenet.com• Infibeam.com - offering better discounts, consumers’ choices are split and they seem less inclined to buy books only from Flipkart.
Understanding the competition
No. Of hits on the websitesSep 2011- Aug Colour Codes Average Scores with respect to Flipkart2012 Flipkart.com 1 Ebay.in 0.82 Myntra.com 0.5 Jabong.com 0.3 Snapdeal.com 0.42
Analysts and venture capitalists say Flipkart making considerable losses on book transactions
Performance measurement• Profit gauge - Repeated transactions - 70% of customers come back• Reducing COD customers.
Flipkart Strengths• Price reductions• 24 hour a day shopping• Complete freedom and time to choose• Satisfied customers – purchase frequently and spending will increase
Segments Shopping Internet Experience as Demographics Orientations Exposure E – ShopperConvenience – oriented New Opening hours Medium-low Men 25-44 Medium – Shoppers and time savings High Class Big TownsConvenience – oriented Opening hours High Men 25-34 experience shoppers and time saving High Class Big TownsInvolved shoppers Only medium High Men 14-24 Medium – available High Class Big TownsDual shoppers Only medium Medium- low Men 14-24 Medium – available High Class Middle TownsPrice oriented shoppers Price reductions - - Men 25-34 Medium/ Medium –High Class Big TownsInformational recreational Low information - - Men 25-34 Medium – surfers search costs and High Class easily Big Towns
Metros Vs Small Towns• In small towns – - consumers value personal communication highly - they are less stressed - have fewer traffic problems So they are less willing to buy online• Metros – - encourages new channels such as internet - nuclear families - traffic problems and more stressed
Behavioral Segmentation 123Occasions • Gifts • Discounts , free home deliveryBenefits • Price comparison User • Potential user Status • First time or second time user
Segmentation VariablesDemographic SegmentationAgeKids – Baby care, ToysTeen – Playstation, Xbox, movies, musicGenderMale – Computers, Mobiles and accessories, WatchesWomen – Beauty and Health care ,Home and KitchenOccupationStudent – Books, Music, Movies, StationariesTraveler – Camera, Luggage, BooksWorking – Mobiles, Computers, Watches
Survey Findings• If a product is priced equal both online and at the Retail store,63 % prefer buying from the Retail outlet• 2/3 rd of them said that Electronic Goods are cheaper to buy online than at the brick and mortar stores• 69% of the respondents said that Online shopping shall replace the Book Stores• 28% of the users said that they had to return an online purchased item when it was delivered• 17 % felt it was not convenient to shop online• 20% reported more varieties online as compared to the 80% who preferred the stores
30 25 26 20 22 No. of events of online 20 purchases in the last 12 10 8 months 0 0 1 2 3 4 5 >=6 15% 37% 15% Sales 12% 6% 15%USP of Flipkart Cash/Card on Competition 9% Delivery 77 100 4 10 0 2 7 Easy to Order29% 62% Easy to replace
Myths- Hogwash Do you feel it is safe to Which product did you buy from Flipkart make payments online? No11% Books Mobile Phone Computer and Accessories Apparels Yes 10% 9% 89% 23% 58%
Consumer oriented model Cost Consumer Availability of products across 14 Heavy discounts on books categoriesFree shipping for purchases above Books can be ordered before they Rs. 300 are launched Marketing Pan India presence Mix Communication ConvenienceAdvertisements via Search Engine Optimization Ease of finding the product and related information Transparent Communication Purchase at the click of a button Once the customer places an order, progress can be tracked Cash/ Card on Delivery
Decision making process Evaluation of Post- Purchase Purchase Decision Alternatives behavior Feedback on Flipkart Customer perceived Faster turn around website and other value time blogs Cash/Card on Delivery Word of MouthWider range across all Easy Return Procedure Affiliate categories in case DOA
Target group Non Tier 1 Cities looking for Cost wider range Effective Time Poor Customers Dot -Com Generation PURCHASE
Understanding the categoryIndia is one of the fastest growing digital markets in the world Unavailability ofASSOCHAM says the online retail a particular Cash/Card onmarket in India may grow to Rs 70 brand in a Delivery billion by 2015 from Rs 27.5 particular region billion, today as internet access improves Discounts and Busy Life Style Offers Reasons for Online Online retail accounts for less Shopping than 1% of the total online market in India thus provide a huge growth potential of the market for both domestic and international players
RIVALRY • High Level of Promotion • Low Entry and Exit Barriers NEW • AccessibilityENTRANTSSUBSTITUTE • Price Wars PORTER’S FIVE FORCES • Low Switching CostCUSTOMERS • Loyalty • New productsSUPPLIERS
SW HELPFUL HARMFUL To achieving the objectives To achieving the objectives INTERNAL FACTORS STRENGTHS WEAKNESSES •BRAND •DELIVERY •SUPPLY CHAIN MANAGEMENT •INTERNET PENETRATION •QUICK TURNAROUND TIME •PAYMENT GATEWAYS •ADVERTISEMENT AND PROMOTION •HIGHER COSTS •STRATEGIC ACQUISITIONS •HUGE REACHEXTERNAL FACTORS •GROWTH IN e-TAIL OT •GROWTH IN e-BOOK CULTURE •NEW PLAYERS SUCH AS AMAZON •BROADBAND PENETRATION •MOBILE APPS OPPORTUNITIES THREATS
New Strategy•None of the people who took the survey said they buy music online•Songs are priced very high , Rs 6 - 15 per song•5000 downloads a day
Flipkart in NEWS• $150m in latest funding round by Nasper• Iconiq Capital - another new investor• Tiger Global and Accel Partners make follow-on investments• MIH India pumping a little over $90 million
PrimaryResearch SuggestionsSecondary Research
Suggestions• Monthly foreign magazine e.g. Man U magazine• Loyalty program, combo offers• Music instruments• Outdoor kits, posters, sporting event DVDs• Greeting Cards• Sponsor an Inter School Literary Competition to encourage students to read• Along with book ordered, send some more books ( popular and related ) with the courier guy to show to customers• Flyte, digital music sales channel of Flipkart can have a relook at the prices