The document analyzes Flipkart, an Indian e-commerce company. It performs a SWOT analysis, finding strengths in Flipkart's growth and investments, and weaknesses in losses and low average transaction values. It also does a PEST analysis and finds opportunities in growing internet access but threats from competition and potential regulation changes. Overall, the document recommends Flipkart focus on profitability, logistics, mobile commerce, and expanding into new regions and customer demographics to maintain its leadership position amid intensifying competition.

1. Sumit K Jha
FLIPKART- COMPANY ANALYSIS AND
STRATEGIC & TACTICAL
RECOMMENDATIONS

2. Published on 10th
Feb 2014
Contents
Introduction ...............................................................................................................2
Company analysis and Competitive positioning ...................................................................2
SWOT Analysis ..........................................................................................................2
Strengths ..............................................................................................................2
Weaknesses ...........................................................................................................2
Opportunities .........................................................................................................3
Threats.................................................................................................................3
Competitive positioning ..............................................................................................3
Industry analysis ..........................................................................................................4
Porter’s five forces model...........................................................................................5
Conclusion and recommendations ....................................................................................6

3. Published on 10th
Feb 2014
Introduction
FlipKart is one of the pioneers in the online retail (eCommerce) sector in India. According to its filing
at the registrar of the companies, it had a sales of INR 1,345 crores in fiscal year 2012-13, which is
approximately equal to USD 217.4 million. This is an increase of 2.7 times the revenue that it
generated previous year. According to even the conservative estimates, Flipakart is on its way to
achieve its coveted goal of reaching USD 1 billion in revenue by the end of fiscal year 2015.
Profitability, though is still not in sight and Flipkart had a loss of INR 192 crores or USD 31 million in the
fiscal year 2012-13, which is substantially higher than the previous fiscal year.
Company analysis and Competitive positioning
FlipKart has sailed ahead of other eCommerce players in India and has been quick to latch on to new
changes in the industry. It is one of the pioneers in the recent changes that have shaped the industry 1)
Cash on delivery to gain customer confidence, 2) creating marketplace to lure small and medium
businesses (SMBs) and 3) backward integration to own the logistics of delivery
SWOT Analysis
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 USD 200 million 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
Weaknesses
 It had losses of INR 192 crores or USD 31 million 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

4. Published on 10th
Feb 2014
Opportunities
 M-commerce is the next development in the related market to reach higher customer base
 Increasing internet penetration and high-speed mobile internet connection opens up interesting
opportunities for expansion
 Spending behavior of the new generation is favorable
 Demographic dividend of India can be tapped and younger customers of the internet era can be
accessed through social media advertisements and branding
 High interest is shown by the Venture capitalist/private equity firms
 Favorable regulations by government as the foreign players are still not allowed. No Foreign
Direct Investment (FDI) in B2C eCommerce market, so, sheltered from foreign competition
Threats
 Indian customers are taking time to get comfortable with the concept of online payment
 There is fierce competition in every product category by different set of players
 Early starters in mCommerce can poach the customers
 100% FDI in B2B eCommerce market and pressure on government to allow FDI in B2C market
 Entry of Google in online e-books and movies market
 Competitors capturing alternative market through innovative strategy (e.g. Buildbazar by
Infibeam)
Competitive positioning
Score out of 10 Weighted score
Parameters Weightage Traditional
stores
FlipKart Snapdeal Infibeam Traditional
stores
FlipKart Snapdeal Infibeam
Competitive
pricing
0.1 8 8 8 9 0.8 0.8 0.8 0.9
Quick Delivery 0.1 10 9 8 7 1 0.9 0.8 0.7
Safe payment 0.125 10 8 8 8 1.25 1 1 1
Payment
options
0.1 3 8 8 8 0.3 0.8 0.8 0.8
Customer
Service
0.125 7 9 7 7 0.875 1.125 0.875 0.875
Ease of
replacement
0.075 6 7 7 7 o.6 0.7 0.7 0.7
Variety 0.075 4 8 8 7 0.3 0.6 0.6 0.525
Quality 0.075 7 8 8 8 0.525 0.6 0.6 0.6
Convenience/
ease of use
0.075 9 8 8 8 0.675 0.6 0.6 0.6
Trustworthiness 0.125 9 8 7 9 1.125 1 0.875 1.125
Total 1 73 81 77 78 7.3 8.1 7.7 7.8
*0 is the least score and 10 is the highest score
* Competitors we selected based on their size, innovativeness and growth potential
FlipKart has scored well against its closest rivals. However, a new set of analysis will have to conducted
when more mature players such as Amazon and eBay enter into the market.

5. Published on 10th
Feb 2014
Company Revenue
(2012-13)
M&A partnerships People
Employed
Size of
operation
Started in Investors
FlipKart 1,345 WeRead (2010)
Mime360,
Chakpak.com
(2011)
Letsbuy (2012)
Partners with Ekart
Logistics to extend
CoD option
4500 Coverage: 95
Cities,
Warehouse in
10 Cities,
Registered
user base: 2
million
2007 Accel Partners,
Tiger Global,
MIH(Nasper
Group),
Iconiq Capital
Snapdeal 600 Grabbon.com
(2010)
Esportabuy.com
1500 Coverage 50
cities and
times
2010 Nexus Venture
partners, Indo-
US Venture
Partners,
Bessemer
Venture
Partners
Infinbean NA 2011- Launched
‘Buildbazzar’
600 NA 2007 NA
The competitive space is expected to undergo a major change with players like Amazon entering.
Amazon and eBay and other large e-retail players have a tried and tested business model that can bring
profitability to the Indian eCommerce industry that still alludes the Indian eCommerce industry.
FlipKart whose promoters started their careers with Amazon will have to get to profitability or at least
should be able to lay out a plan to get to profitable business structure soon.
Industry analysis
India’s consumer-facing e-Commerce market (B2C-C2C) grew at a whopping CAGR of 49.1% from 2007
to 2011 to reach a market size of US$9.9 billion. On the other hand, the B2B market is a small
contributor to the overall domestic e-Commerce market, and it was estimated at US$50.37 million in
2011.

6. Published on 10th
Feb 2014
The country’s B2C e-Commerce sector can be split into two broad categories — travel and non-travel.
Online travel is the largest domestic B2C e-Commerce segment, accounting for 81% revenues in 2011.
e-Commerce ecosystem Enablers falling in; Devices, Internet and payment landscape undergoing
change
Porter’s five forces model
Forces Parameters Grading
Supplier
Power
Supplier Switching costs Medium
Degree of differentiation of inputs Medium
Presence of substitute inputs High
Supplier concentration to firm concentration ratio Medium
Threat of forward integration High
Cost of inputs to selling price of the product Low
Customer
power
Buyer concentration to firm concentration ratio Low
Bargaining leverage Medium
Buyer volume Medium
Buyer switching costs relative to firm switching costs Low
Buyer information availability Medium
Ability to backward integrate Low
Availability of existing substitute costs High
Buyer price sensitivity High
Intensity of
competitive
rivalry
Number of competitors (Limited) High
Rate of industry growth High
Exit barriers (Cost involved) Medium
Diversity of competitors High
Informational complexity and asymmetry Medium
Level of advertising expenses (Print, media) High
Sustainable competitive advantage through improvisation Mediumm
Threat of
new entrants
Existence of barriers to entry (Regulations etc.) Medium
Brand equity High
Switching costs or sunk costs Medium
Capital requirements Medium
Learning curve advantages Medium
Expected retaliation by incumbents Low
Government policies High
Threat of
substitutes
Buyer propensity to substitute High
Relative performance of substitutes High
Buyer switching costs Low
Perceived level of product differentiation Medium
In totality, the industry is easy to enter but difficult to sustain. The high volume and low margin
business has to be carefully managed. This amply shown in the high churn rate in the industry where
many players have entered and then went bankrupt. With profitability still alluding the players the
industry entrants need to be careful.
In totality there are 5 themes in the industry that will pan out next fiscal year
 Growth- Product portfolio expansion and geographical expansion will be the major growth
drivers
 Profitability- As the industry becomes more acceptable, customer trust will become less of a
challenge. The questions of showing profitability or a plan to show profitability will become
more pertinent. Industry may see some consolidation this year but definitely next year
 Platforms- mCommerce will make an impact and interfaces will become more interactive and
intuitive

7. Published on 10th
Feb 2014
 Business models- Marketplace will be a key driver but many of the companies will start carrying
inventory
 Backward/forward integration- Owning the supply chain including delivery logistics to take the
control from the unreliable courier company will be the key. Self-branded products will enter
the market
Conclusion and recommendations
In the broader context, FlipKart has to chalk out a plan to become profitable in the next five years by
squeezing the costs, expanding geographically and demographically and getting the business model
right.
Based on the analysis, FlipKart should take the following 10 steps:
 Enhance mCommerce capabilities
o 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
o 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
 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
References
In new data, 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

8. Published on 10th
Feb 2014
What Indian E-Commerce Companies Plan To Do
http://www.medianama.com/2014/01/223-outlook14-what-indian-e-commerce-companies-plan-to-do/
Strategic Analysis: Flipkart Competitive Position and Analysis
http://geniicon.blogspot.in/2013/05/strategic-analysis-flipkart-competitive_27.html
Rebirth of e-Commerce in India (Ernst & young)