How can flipkart compete with amazon
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After studying the consumer insights for e-commerce industry, we have advised flipkart, topdog in its category, on how to increase and sustain its market share. There are also strategies to complete with new and existing entrants
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How can flipkart compete with amazon
- 1. Consider a Topdog in Industry “X” ,advise it Brand Chosen : Flipkart Industry : E-commerce
- 2. Industry Analysis :E-commerce in India Started in India in the year with the introduction of B2B portals in 1996, now E-Commerce is all set to become one of the successful medium for business transactions. The eras that defined the rise of Ecommerce in India • Between 2000 and 2005 • Between 2005 and 2010 • From 2010 India’s E-Commerce market was about $2.5 billion in 2009, it went up to $6.3 billion in 2011 and to $16 billion in 2013 and is expected to grow huge $56 billion by 2023 that would be 6.5% of the total retail market. E-Commerce has led to: • Reduced search and transaction cost • Improved customer service • Improved shopping experience and convenience • More transparency of information • Quality products and services Drivers of this industry: 1. Mobile for location-based marketing 2. Personalization to meet the needs of each customer. 3. Convenience and shopping experience 4. Easy accessibility and availability 5. Wide range of products 6. Low price through offers and discounts
- 3. Challenges in the E-commerce industry 1.High return ratio leading to reverse logistics 2.Preference to Cash on delivery mode due to low credit card penetration and less trust on online transactions. Such transactions are expensive for the seller. 3. Most payment gateways have a high failure rate. This leads to loss out of business as several customers do not reattempt to do the payment. 4. Internet penetration is low and the quality of connectivity is also poor. 5. Smartphone penetration is not significant in India. 40% of Flipkart’s transactions are done on mobile. The customer base can be increased with higher penetration of Smartphone. 6. Buying of a product on E-commerce websites does not allow the customers to have a touch and feel experience. 7. Logistics is a problem in thousands of Indian towns. Due to the inaccessibility of many small towns in India is a factor driving the logistics problem. COD aggravates this problem.
- 4. Flipkart, India’s “Amazon” Factsheet: • Brainchild of Sachin and Binny Bansal that went live in 2007. • Expected revenues in ’14 : Rs. 75 crores • Expected to raise $500 million from the perspective of a listing in the NASDAQ next year. Currently it has raised over $750 million in the past 7 years over 5 rounds • As a market leader it delivers 5 million shipments monthly to 18 million registered users in 150 cities • It is eyeing a share of about 65 per cent of the online fashion segment in the next 12-18 months. What made Flipkart a Topdog • First Mover Benefit: Began with strategically effiecient product categories : books ,electronics • Pioneering innovation :Sales of Motorola series have clocked 1 million pieces in 5 months .Currently looking to stock the leading Chinese brand ,Xiaomi • Excellent service and product quality contributing to maximum amount of Credibility in the market • Ease of use :Simple and user friendly interface and ease of transactions • Market leader despite offering relatively high prices • Discounts and free shipping • Successful WOM marketing
- 5. Adapting to the model for the Indian Market : • Cash on Delivery was an output of the credit / debit card penetration in the country as against the number of consumers willing to shop online. • In India, the consumer had to be home for a delivery and leaving the parcel outside wasn’t an option • They tackled the distribution barrier as a technology problem and developed strong in-house systems • The currently have a network comprising 19,000 pincodes including far-flung locations Differentiated Value Added Services : • Flipkart Student offers For the brand, the student category makes a perfect fit as they are presumably online – savvy and the brand gets to tap on their consumption pattern at the very beginning of their purchasing cycle. • Flipkart First Capturing the existing gap in the market by providing same day delivery services Strategies used :
- 6. Current Problem Identification: • Calibrated accession for survival: Flipkart took over Myntra for $300-330 million to acquire the market leader in the fashion section. “There is absolutely no chance or thought that Flipkart or Myntra will merge as a single brand in the coming times. Flipkart will have a broad catalogue, including that of Myntra, while Myntra will continue to position itself as fashion curator. The merger has happened at the shareholder level, with no change in the experience of the consumer.” • Threat of Amazon , the parent player cannibalizing the Indian market on a large scale “Currently the brand has no distinct competitive advantage in terms of brand recognition, customer stickiness, repeat purchases or healthy margins.“
- 9. Flipkart vs Amazon • Flipkart is a market place model while Amazon is an inventory and marketplace model. • Flipkart has 1706 SKUs in stock and 4172 offers while Amazon has 1535 SKUs in stock and 2244 offers. • Mobile category is quite price sensitive and fight is very intense between flipkart and amazon. • In cameras category amazon offers better prices than flipkart. • In Laptops category flipkart has great advantge and they are way ahead of amazon. • Amazon has 1.5 Crore products listed on its website while flipkart has millions of products across 21 categories. • The daily shipment of flipkart is around 80,000 a day on average while it is 40,000 a day for amazon. • Amazon in its initial phase is acting like a trendsetter and flipkart is following their concept.
- 10. Flipkart vs Snapdeal Flipkart • Follows hybrid model, similar to Amazon • Ekart Logistics • Payment through PayZippy Flipkart • Lead categories, targets every individual who shops online • Offers everything, except groceries and automobiles • Focus on mobile device which generates 20% of sales Snapdeal • Follows pure-play marketplace • Does not handle logistics on its own • Payment through Klickpay Snapdeal • Target Non-metros, focuses on middle income market • Focuses on getting unique unbranded products. • Hand held devices generates 30% of sales Current Strategy Customer Strategy
- 11. Top-Dog Strategy Recommendations: • Block exposure to evidence: This strategy typically works in a case where there is strong motivation to learn and prior knowledge is well developed in favour of the market leader. • Reinforce the primary niche of the Brand: Today more than 60 per cent of shoppers on Flipkart are repeat customers. The brand should optimize onto this and should focus on customer stickiness and brand loyalty. • Setting the Brand Agenda Topdogs have the market power and can use it to control the consumer’s learning agenda . Tactic: Value added services for Customer Loyalty: Exclusive Dealerships: Flipkart should create user experiences based on 'All things Flipkart' just as Amazon does with its affordable Kindle Fire
- 12. Recommendations FLIP-KARDS for brand loyals Fashion styling based on product choices Hand to Hand exchange via Myntra logistics
- 13. Recommendations Reward coupon to loyalists for product review Expert advice on electronic products from tech bloggers Modelled clothes as per size chart
- 14. Thank You Presented by : Group Number 7 Itisha Sharma : DM151 Sheikh Shadab : DM15150 Shivam Rastogi : DM15151 Soochna Sahu : DM15158 Suhasini Jain : DM15256 Swati Narayan : DM15161
Editor's Notes
- 1) Indian customers return much of the merchandise they purchase online. Returns turn out to be expensive for the E-commerce players as this gives rise to reverse logistics. 2 )Such transactions are expensive for the seller.
- Under this scheme, students can upload a picture of their student IDs and avail benefits like Rs.150 off on a purchase of Rs.750 onwards and 50% off on Flipkart First similar to Amazon Prime in the US. Through special offers, Flipkart aims to pitch itself as the go-to destination for all their needs. Under this scheme, Flipkart offers customer’s unlimited access to In-a-Day Guarantee delivery; free standard delivery with no minimum purchase price; Same-day Guarantee delivery at a discounted price, and a bonus 60-day replacement guarantee, instead of the usual 30-day period. Currently both Flipkart and Amazon’s one day delivery programme charges a fee of Rs.100
- The combined entity’s growth strategy is a tricky issue, as Flipkart and Myntra had separate brand identities. As experts from the retail industry and consultancies believe that Flipkart is going the Amazon –Clone way and needs to come up with strategies to capture and sustain its market.
- Strength Explainations : (Delivery time and reach, user interface and experience and tie-ups for safe and reliable banking) Payzippy where customers can safely keep their credit card details. Convenient payment mode. where sellers need to register in this platform and buyers can negotiate with the sellers on varied service levels and it also helps company to reduce its own inventory. Flipkart will just deliver those products. Weaknesses : Most of the money has been invested by Venture firms like Tiger global and Accel Partners. So, most of the decisions that are taken by founders of the firm have to be approved by Investors
- . In such a scenario the leader usually looks to benefit by obstructing access to evidence. Topdog strategies offer reasons for not experimenting by highlighting the product and service quality Credibility and customer confidence is the single most important reason why Flipkart is a market leader in a highly crowded market. When the consumer does not know enough about the product category to know which alternatives are missing , the topdog should be able to frame the alternatives and provide expert choice to the customer When the consumer does not know enough about the product category to know which alternatives are missing , the topdog should be able to frame the alternatives and provide expert choice to the customer
- Why Flipkart First is not a good Idea: The Indian consumer is not fundamentally stringed to deposit money in advance just so he can get one day delivery through the year .The Indian e-tailing space hasn’t evolved to such a level as yet . What can we do to ensure customer stickiness in the light of competitors: Using the existing data , we can map out consumer who have made more than 10 purchases in the past 12 months . We can send physical membership cards to these customers under the name “Flip-Kards” that ensure 1-day delivery for all their future purchases. How it benefits the brand : We cut out the incentive for brand loyals to shift. We capture a segment of the market that is into regular e-shopping Ensure word of mouth marketing as they would serve as influencers for our brand We incentivize other volume shoppers to purchase more and belong to the exclusive group. Currently most e-fashion brands use a feature that shows “users who viewed this product also saw “. Our aim to evolve this service and add credibility to these suggestions. We get external fashion bloggers and in house stylists with the aid of customer data to couple products with 3-4 other products ie shoes, accessories, jackets etc. and display them in a window below The customer data comes in handy here as this problem essentially requires the etailer to track the browsing behaviour of its 18 million customers. Their purchase history will give you clues on what are the best suggestions the site could make while shoppers are browsing. Product relationships are another insight the company is interested in. If customers who buy white shirts tend to buy brown trousers with them, the apparel seller could do well to bundle the two products together. Flipkart’s data engines would mine such insights and pass them on to the sellers registered on their platform Also, the online space values the opinion of fashion bloggers who are taken as experts in the field. We could have screen-names and links of these bloggers and experts aided with these pictures. How this helps the brand: Targets consumers displaying variety seeking behavior especially women who are perpetually on the lookout for more options Expert styling options Capturing the latent wants of the consumer by using Data Analytics Include social proof and expert data on your product pages Hand to hand exchange The success of an Internet shopping portal depends on the customer/ user experience that they provide. This in turn not only depends on the website that they put up, but also on the delivery and return process they have in place. The biggest dilemma an Indian buyer faces before ordering clothes or shoes or any such commodities online is the issues with the size and shape. The perfect product is not always delivered. Now Myntra being an online shopping site primarily focused on garments and shoes is surely affected by it. What can be done in this situation? One of the many solutions can be to make the return policy/ process much easier. Till date, the delivery person delivers the products and takes off. When the customers try the product after that and are unsatisfied with the size, shape, colour etc. they are frustrated as they will have to go to a courier service to send back the product to get it replaced or to return it. I want to suggest a process which might reduce this customer frustration and can make the return process customer friendly which will for sure enhance the sales. What if the delivery person can wait on the door for the customer to at least try the product and see if they are satisfied. If they are not, they can simply handover the product to the same delivery guy and get a receipt of it from them. In any business, customers are considered to be king and if customers order from your site once and do not wish to go back to your website to order something else in future due to the return process, you are ultimately self poisoning your business. This one little step might bring some extra customers in turn of the investment that the company will have to put in order to ensure proper delivery and return of the products.
- 1) In an e-commerce industry, the biggest hurdle in selling products to the customers is that they can’t see and feel the product, unlike in shops and stores. This leads to an uncertainty element in any purchase, as all they know about the product is through the picture they see, and features mentioned. In such scenario, a review from other customers plays. a very significant role. It helps in developing a trust factor amongst the customer, that the product they are planning to buy is used and appreciated by other. It helps in lowering the level of uncertainty. However, it is usually difficult to get customer reviews, and more so, good customer reviews. This is because people usually have a tendency to complain about the bad product, but not say anything about the good ones. Due to these reasons we have thought assigning reward points for our loyal customers, on writing a review. This approach is mainly centered to the loyal customers only because, they are expected to be more honest and detailed in their review, as they like the company and would be willing to spend some time writing a good review. However to encourage them further, we have these reward points. Every time a customer writes a review, he would gain 10 reward points, which would be added to his account. After collecting 100 reward points, the customer can make a purchase of worth 1000 rupees, using those points. Different denominations of rewards points will imply different amount, for which they can buy any product. This would help in making the process of review more interesting and exciting, as it would be associated to reward points. 2) A major factor affecting the purchase decision of an electronic product is the capability to understand an judge its features. A factor that works in buying an electronic good from retail shops, is the key role played by the shop keeper. He assists the buyer, in making a decision by suggesting him products that are suitable for his needs. He translates the features of a product in layman terms and makes the buying simpler. However while buying a product online, it leaves most of the not-so-techy customers confused, who then go and buy the product from a retail shop. To assist customers in such situations, we have thought to have an additional page with reviews on different electronic products from tech blogger and other experts. We can’t just rely on review from on customer in this case, as when people invest comparatively higher amount of money in electronics, they more tend to rely on expert opinion. This page would have reviews and comments from experts from about the product features explained in layman terms, and specifying what kind of purpose would it meet. They will help the customers in making a purchase decision based on these, and they won’t have to search all over the internet for these expert reviews. It will be all at one place. 3) Clothes are the most frequently purchase online items, as they are usually cheaper compared to store prices, and people tend to buy them out of impulse, or just to seek variety and convenience. Whatever may be the case, clothes are one segment that really helps an e-commerce website to grow and be more popular. However, a major hurdle in buying clothes in “How would it look on me?” factor. Many a times, consumers do like the cloth, but are also well aware that the model wearing that particular cloth has a very different body type than their own. Mostly e-commerce website display their clothes on pretty looking, thin models. But most of the customers are not as thin and of the same height. Especially the customer segment who are a little on the heavier side, find buying clothes very difficult. They feel that thought he dress might be looking really good on the model, it might not suit their body type. To address this concern we have thought of having five different mannequins, with different body types, wearing the same cloth. These 5 types should broadly cover all the body types. This would help customers to relate to the mannequin wearing the cloth, who has a very similar body structure to of their own. And give them a better understanding of what will suit them and what will not. They will also be a more comfortable level while buying a cloth