Flipkart is an Indian e-commerce company founded in 2007 by former Amazon employees Binny Bansal and Sachin Bansal. It began as an online book retailer and has since expanded into various product categories. Flipkart leverages various services and strategies to provide customers with a positive shopping experience, such as cash-on-delivery, easy returns, and its own in-house logistics and customer support teams. It has grown to become one of the largest e-commerce players in India through strategic acquisitions and a complex corporate structure.
The Art of Decision-Making: Navigating Complexity and Uncertainty
The journey of flipkart
1. THE JOURNEY OF FLIPKART
India is one of the top economies that are growing rapidly. Itconsists of large
number of customers and huge mass using internet as a sourceto buy things
they wish to (approx. 100million). This is because of the increasing rates of
local and domestic firms using the E-business modelto do business which is
different fromthe traditional method of doing business in India. The E-
commerce provides online shopping all the way frombooks to electronic
items.
Flipkartis an Indian based e-commerce company started by Binny Bansaland
Sachin Bansalin the year 2007 which is headquartered in Bangalore. Back in
2007 when Flipkartwas launched, Indian e-commerce was taking its beginners
steps. Both of them had previously worked atAmazon.com. Posttheir
experiences, they ventured into a similar e-business idea and launched it in
India. Flipkart.comworks with the aim of making products and goods easily
available at the doorsteps of anyone who has internet access. Flipkart.com
started off fromselling books in 2007 and then entered into consumer
electronic category by launching mobile phones in September 2010. Sincethen
it kept on adding more products such as computers, electronic gadgets, home
appliances etc.
Itprovides online shoppers a comfortable experience becauseof its innovative
services like:
o Cash on delivery
o 30-day replacement policy
o Easy monthly installment options
o Free shipping
o Discountprices and deals
Flipkartstarted with an initial investment of Rs. 4, 00,000 and has undoubtedly
grown up to be one of the biggeste-commerce players in the Indian peninsula.
2.
3. MEN BEHIND THE SUCCESS
Sachin and Binny Bansal are both IITgraduates and used to work in Amazon.
That is when they decided to start their own retail business. Their brainchild is
Flipkart, the e-retail company that went on to become the country’s firstand
the biggestin less than 6 years. Justlike most businesses, Flipkartstarted off
small. Both the founders notreally sureabout the idea used to deliver books to
the customers themselves on their scooter.
However, they dared to start off because they thought that the internet
shopping scene in India deserved to be better. Their thorough commitment to
stay true to their mission, i.e, quality serviceto customers is whatlead this
company to be such a huge success. They worked hard, even gave away
pamphlets of their company outside bookstores when Flipkartwas only selling
books at the beginning.
As CEO, Sachin oversees all the customer facing activities of the company
ranging fromtechnology to marketing. He is also in charge of Flipkart's
corporatedivisions which include the finance and legal departments.
Binny oversees all operational activities that come into play from the time the
customer places an order till the time of delivery. This spans across divisions
like warehousing, logistics and customer support.
4. MARKET EXPANSION
Flipkart’s success also greatly depends on their strategic acquisitions in the
years following its birth.
2010
• WeRead, a social book discovery tool
2011
• Mime360, a digitalcontent platform company
• Chapak.com,a Bollywoodnews site that offers
updates, news, photos and videos
2012
• Letsbuy.com, an Indiane-retailer in electronics
2014
• Acquired Myntra.comin an estimated Rs.2000
crore deal.
2015
Flipkart acquired a mobilemarketing start-up
as to strengthen its mobile platform.
6. This is in shortwhatFlipkart does:
Itsources goods frommanufacturers, sells thosegoods to many of its
third-party sellers who then, in turn, offer those products to shoppers.
Flipkartprovides the technology platform and logistics services and
takes a commission on every sale on its site.
This isn’thow a puremarketplace—Flipkartclaims to be one—operates.
Which is why Flipkart has had to set up a complex web of at least nine
entities.
Today, after nearly six rounds of investments frommore than 15
investors and severalacquisitions, Flipkart’s corporatestructurewould
make older Indian conglomerates proud. Mostof Flipkart’s entities
finally lead to the ultimate holding entity, FlipkartPvt. Ltd (FPL), which
was set up in October 2011 in Singapore.
There are three entities registered in Singapore as 100% subsidiaries of
FPL: Flipkart Marketplace Pvt. Ltd, FlipkartLogistics Pvt. Ltd and Flipkart
Payments Pvt. Ltd.
These companies, in turn, hold stakes in five Indian entities: Flipkart
India Pvt. Ltd, the wholesale cash-and-carry entity; FlipkartInternetPvt.
Ltd, which owns Flipkart.comand provides technology platform to e-
commerce companies.
Digital Media Pvt. Ltd, currently a dormant company, formerly known as
Digital MarketplacePvt. Ltd ; Digital Management Services Pvt. Ltd that
ran Letsbuy.com; and FlipkartPayment Gateway Services Pvt. Ltd, which
ran payments productpayzippy and is currently in middle of
restructuring its operations and will continue to focus on payment
services.
The ownership of FPL Singaporelargely rests with Tiger Global, Accel
Partners, Naspers and the Bansals. Tiger Global, the US-based hedge
fund that holds close to 30% in the parent company, has two seats on
the board.
7. IN-HOUSE LOGISTICS
Logistics is one of the most important facets of any successfulecommerce
venture. Flipkart ships morethan 100000 items a day which makes
management of the logistics a cumbersometask for the company.
Furthermore, the costof the delivery is born by the company itself making
logistics a financially complex issuealso. Hence in order to successfully manage
logistics Flipkart uses its in-houselogistics known as, eKart (EKL).
The e-commerce company created eKart as a separate brand to serveWS-
Retail, the B2Cside of Flipkart, in April2013 and currently reaches consumers
in about 150 cities. eKart currently offers services such as delivery logistics,
reverselogistics and pay on delivery. Italso offers customer supportand
technology integration for order tracking, customer notifications, reporting
and analysis, billing etc. In March 2014, Flipkartbegan to deliver packages for
its competitors, as the company's logistics arm; eKart Logistics opens services
for other e-tail ventures. While more than 90% of the Cash on delivery (COD)
shipments and about 60-70% of theoverall shipments are delivered by the EKL
the restof shipments are catered by 3PL serviceproviders. Moreover, if there
are more than 100 deliveries for a particular destination the company uses
EKL. In caseof EKL, the shipment is first transported to Mother hub and then to
delivery hub and subsequently fromdelivery hub the last mile delivery is done
using suitable mode of transportsuch as two-wheelers, bicycles, or on foot.
The company has tie-ups with more than 15 courier companies like Blue Dart,
FirstFlight etc. to deliver their products and Indian postfor areas where
couriers do not reach. And to manage the 3PL providers efficiently the
company allocates time slots to different logistics partners and they can pick
up deliveries on specified time slots only.
Developing its in houselogistics has helped Flipkartsavecommissions worth
than 2% that would have been otherwisepaid to courier firms. Itis also easily
able to accept cash on delivery, which make up about 60 percent of its orders.
Itcan also track packages moreaccurately. Also the labor cost is relatively
cheap in India, the delivery costof single package is a mere Rs. 65 a package.
8. PROCUREMENT
When Flipkartstarted its operations, they had employed the consignment
model of procurement. In this model, the retailer (in this caseFlipkart) holds
the inventory owned by the supplier, and buys it fromthe supplier only when it
is sold to the end consumer. Since the channel was new and unproven, this
was the most risk-freeway to operate. Later this was discontinued and
inventory was purchased to ensure superior delivery times and customer
satisfaction. But with foreign direct investment (FDI) favoring themarketplace
model in April 2013, Flipkartchanged its business model to marketplace
model. With a marketplace model, Flipkart no longer has an inventory of its
own, rather buyers can deal with sellers directly and the delivery will be done
by Flipkart. The model is similar to eBay India and Amazon.in. At present; the
entire inventory of Flipkart is being managed by WS Retail which is flipkart’s
pet project. While WS Retail will continue to be one of the sellers, Flipkarthas
added more than 50 sellers to its list.
9. CUSTOMER SUPPORT
Customer Supportfunction for an e-commerce website is one of the most
important touch- points for the business in terms of building trust, customer
acquisition and maintaining customer loyalty.
Flipkart’s Customer Supportteam consists of call-center agents who handle in-
bound and out-bound calls and also a team that handles e-mail queries. The
entire team is based out of Bangalore and forms a corepart of Flipkart’s 6,000
-strong employee base. Given that Flipkart tries to differentiate itself on
superior shopping experience and customer serviceis an integral part of that.
Flipkartprefers to train its own supportstaff rather than outsourcing the
function to a BPO agency.
Flipkart, with its focus on customer delight, ensures an excellent after-sales
serviceto its customers with regard to the delivery and/or addressing
grievances related to any faulty or unsatisfactory products. Thereturn of such
items is done in an effective manner without any disputes. This is possible
given the understanding with the vendors. For example, in case of electronics,
warranty and after-sales serviceis largely manufacturer’s responsibility.
Whenever required, Flipkart facilitates a smooth interaction between the
customer and manufacturer/servicecenter. Flipkartvaries between one day
guaranteed delivery and three weeks depending on location and availability of
product.
SUPPLY MANAGEMENT
Flipkarthas always operated on the philosophy of starting out small and then
scaling up as demand grows. Ithas been the same with selection of suppliers.
For a new category, they generally startof by sourcing fromlocal suppliers and
distributors. Oncethere is enough demand generated, they approach the
larger wholesalers or manufacturers directly. This serves two main purposes: It
helps them to get better deals fromthe bigger manufacturers if they can order
in larger quantities frequently enough. Itavoids the channel conflict dilemma
that large suppliers facewhen they agree to similar terms with a smaller
volume online player like Flipkart as compared to an established offline
distributor.
10. CONCLUSION
A credible rival can do wonders to an enterprise and Flipkartis no different.
The entry of Amazon in India has enabled Flipkartdevelop a lot of in-house
innovation and organically developed best-practices - that have now become
the industry standard. Flipkartbegan operations on the consignment model;
goods wereprocured fromsuppliers on demand, based on the orders received
through the website. Later, the books-to-electronics e-shop adopted the
warehousemodel.
The company had its own warehouses, and maintained its own inventory.
However, in July 2013, Flipkartlaunched its model of marketplacejustone
month after Amazon launched its marketplace in India. Itintroduced payments
brand PayZippy for online merchants and customers seeking fast, hassle-free
and safepayment options. Some 70 per cent of its shipments are done by its
own logistics company and about half of deliveries are on a cash-on-delivery
basis.
Flipkarthas recently introduced the next day guarantee delivery service and
shopping fromits own mobile application. Given the critical mass of
transactions Flipkartcontrols - about 100,000a day - the company is betting
that it has the volumes to lay the foundation of what will be a profitable
business. Lastbut not the least; Flipkarthas very clearly prioritized customer
delight as its chief avenue for customer acquisition and retention.