CURIOUS CASE OF FLIPKART
OK, let’s see the fundamentals, Indian eCommerce industry after existing for a decade is changing fast. It is expected to grow 47 per cent, to more than Rs. 460 billion this year, according to the Internet and Mobile Association of India and to reach Rs. 12 Lakh crore by 2020.
Flipkart is one of the prime players of this industry, In 2007 this new age eCommerce company was founded by Sachin Bansal and Binny Bansal, alumni of the IIT Delhi and ex-employees of Amazon.com. As of today, Flipkart employs more than 4,500 people, 35 delivery centres to 25 warehouses, more than 60 delivery centres and more than 2 million satisfied customers. They sell 17,500 items each day. In India, it is currently the 13th most visited website. Its success has been because of its first mover’s advantage. But now what? As the time passes and competition increases the advantage is disappearing very fast. The only advantage they seem to have now, is the capital raised from the investors, but considering how lucrative market India is, it won’t be long that competitors will start getting similar, if not more funding from international investors. So what is the next goal for Flipkart?
Idea
Flipkart’s current vision is ‘To become Amazon of India’ and their mission revolves round ‘Providing delightful customer experience’. Considering Flipkart is one of the most looked forward technology company of next decade and Amazon has already entered Indian market there is a huge need for them to rework and revitalize on their long term goal and vision and develop a new Brand idea for coming future. The store started with selling books and in 2010 branched out to selling CDs, DVDs, mobile phones and accessories, cameras, computers, computer accessories and peripherals, and in 2011, pens & stationery, other electronic items such as home appliances, kitchen appliances, personal care gadgets, health care products, air coolers, school supplies, office supplies, art supplies, apparel & life style products to its product portfolio.
Competencies
Flipkart has launched its own products range under the name DigiFlip, offering camera bags, pen-drives, headphones, computer accessories etc. They are eventually expanding the range. In a very aggressive market penetration strategy, in 2010 they acquired WeRead, a social book discovery tool, in 2011 Mime360, a digital content platform company, and Chakpak.com, a Bollywood news site, in 2012 Letsbuy.com, India's second largest e-retailer in electronics. They have recently started a new initiative, Slash n, the Flipkart Technology Conference, it reflects Flipkart’s culture that Knowledge is meant to be shared and encourages an open platform for technologists to unite. They are also now implementing Oracle Financials, the first major enterprise software. Innovative mindset is one of the most important competencies of Flipkart. The ground breaking cash on delivery system, 30-day replacement policy, Free shipping etc. has been talk of town and been copied by all the competitors. Tremendous customer focus and dedicated after sales service has helped them to make their own place in the hearts of the customers. It’s a price oriented country and a price oriented market, up till now Flipkart has been very successfully playing on the price factor to grow their revenue.
Personality
Flipkart's advertisements portray children as grown-up protagonists who try to persuade customers to shop on Flipkart. The campaign became an instant hit and has been successful in building a huge awareness for the brand. Initially the tagline was "The Book Store at Your Door" which then changed to "The online Megastore!" Flipkart is known for its good website design which has evolved over years and has become more easy to access and more customer friendly. Effective use of online and digital marketing as well as developing through word of mouth has been crucial to Flipkart.
More than what meets the eye
Inventory: Flipkart is increasing their inventory and there is a huge growing return of the goods from customers, 30-day returns no questions asked policy for the customers is back firing for Flipkart. Aggressive inventory acquisition is also adding up to the problems. Some distributors are complaining of delays in payments. Flipkart maintains these delays are because the software it uses to maintain financial records are being updated.
Ownership: There are many suspicions about the ownership of the company. May people think Tiger Global acquires stakes, understand the real metrics of private companies, and then sell them to the public through an IPO just before that advantage disappears. What is the composition and function of the board at Flipkart is still a secret.
HR disaster: Many international experienced executives joined Flipkart on the top posts like HR director, VP finance etc, but mysteriously quit within a year. There is no openness in the system and only the group of people close to the Bansals used to take decisions, they all were from IIT Delhi.
Flyte Music store: In 2012, they launched Flyte Digital Music Store, a legal music download service like iTunes , but recently they closed the service down to cut the costs. They have also started to raise prices of the books from past few months.
FDI Regulations: On November 2012, Flipkart became one of the companies being probed for alleged violations of FDI regulations of the Foreign Exchange Management Act.
Future opportunities
People don’t hate FK, they do trust FK, they also like FK, some of them love FK, then how to build further? The next phase of Flipkart is going to be full of competitive and corporate sustainability challenges and the most important is that they don’t get the inertia of the success.
Adolescence: Filpkart brand is in a transition phase, it has grown from a hyperactive child phase to more grown up but an awkward stage of adolescence. In the first 5 years of the brand, it has a very fast growth rate especially the technology company. It is exploring its full potential, but the next age of adolescence in this phase the brand faces new challenges and has to change itself, they have to take precautionary measures that they don’t get laid back because of the success and also prepare for the next war with the big players. Flipkart brand can use this as an opportunity to establish itself as a successful brand in the market because hence forth it will not be called a start-up anymore.
Revising the vision: Now when Amazon is entering India, Flipkart has a great advantage over Amazon in terms of distribution and logistics networks, etc. Flipkart’s vision was to become Amazon of India. In 5 years time, with the biggest market share, it has already achieved it. Now, what do they stand for? Indian Amazon? Don’t they need to have their own identity? Now Flipkart is not just an objective, to become someone, I think now it’s time for them to derive the big brand idea from the expectations and experiences of the stakeholders, employees and the customers and rebuild the vision for Flipkart. This will be a long research oriented exercise and a full-fledged rebrand project, but it will clearly define Flipkart and its objectives to be achieved in the coming decade as well as armor itself for upcoming challenges. This exercise will also be able to give a bigger purpose to Flipkart than just increasing sales and profit making. It will also motivate the current employees and retain them for longer period which has been a challenge for Flipkart.
IPO: Filpkart is thinking of going for an IPO in next couple of years, but it’s going to be very challenging for them. As, the existing private investors would sell their shares to the public, reducing the company’s ability to raise funds for itself and the strategy for the IPO will have to be totally different than the strategy they have previously used to get the private investors. The profits are the only way public will invest will buy the IPO. As of now Flipkart has not been able to show substantial profit figures. Nevertheless IPO is a great opportunity for the Flipkart brand, IT demands a new kind of trust in the minds of the people, this trust will not be based on the customer service but will have to be based on the overall performance of the brand, so there is an opportunity for the brand to refresh itself at this moment and rethink its brand future aligned with the IPO.
Going global: Be the first ever Indian ecommerce business to go global. The world is looking towards emerging economies and what they can offer to the world. Why not be a pioneer? Start small and broaden the horizons. Indian price sensitive mentality and conscious spending patterns will always be a barrier for Flipkart to reach its financial break even soon and will have to depend on external funding in order to sustain. Going global will increase the cash flow many fold. Bansal’s had worked for Amazon before and also had exposure to International markets. Flipkart has an aggressive acquisition strategy, why not acquire an ecommerce company outside India? This will also build more trust in the minds of existing consumer and kill the competitive edge which Amazon is going to have being a International player. Flipkart will be able to see eye to eye with Amazon as the competition heats up. It will also be a perfect strategy for the upcoming IPO that they are planning and build a long term goal / objective for Flipkart. One would feel, this is a risky strategy at this moment in time with a global slowdown and world looking towards India as a new growing market, why would one not concentrate here and think of going global? But in long term it will be proved that this was the most appropriate decision taken at most appropriate time.
Rebuild trust internally: Flipkart has faced huge flak in terms of internal employee trust. Ex-employees have complained that, there is no openness in the system and only the group of people close to the Bansals used to take decisions. There is an urgent need to change this perception. No company in this modern business scenario can have an authoritarian mind set, especially if they are going to have an IPO they should have more collaborative approach towards their peers. Although FK have tried to copy the playfulness and other elements of cultural environment from the international technology companies like Google and Zappos, they have not been able to imbibe the values which they have on their website. This can be actually done with a uniquely designed culture change program for the top management (including Bansals) making them understand that the culture should be developed, values should be derived and cannot be copied from someone else. The factors like employees of Indian origin, diverse personal cultures etc will play a big role in defining this new culture which will be totally different than the international companies but will be totally relevant to Flipkart. It will also help in attracting amazing talent which is one of the most important assets of this business.
Build the market: Previously, Japanese people did not drink coffee. Nestle introduced coffee flavored ice cream in the Japanese market for kids so that the future consumers will have a taste and affection towards coffee and that will open a new market for Nestle after 20 years. Flipkart sells mobiles, but there is a fantastic opportunity which it can use to build the market. Simple question to be asked is: who is going to buy from Flipkart in future, the smartphone and internet users, Filpkart has a great opportunity to invest just now to develop this market of the first time mobile smartphone buyers. If the customer gets an exclusive deal from Filpkart for his smartphone / tablet etc he will have a positive perception about Filpkart and will use that same smartphone to buy other things from Filpkart. They must tie up and have exclusive contracts with mobile companies and telecommunication & broadband service providers. They can also develop programs for educational institutes, not with a objective of revenue generation but to develop their future customers / employees.
(Source Disclaimer: All the information has been taken from various articles and reports available online.)
Flipkart is one of the prime players of this industry, In 2007 this new age eCommerce company was founded by Sachin Bansal and Binny Bansal, alumni of the IIT Delhi and ex-employees of Amazon.com. As of today, Flipkart employs more than 4,500 people, 35 delivery centres to 25 warehouses, more than 60 delivery centres and more than 2 million satisfied customers. They sell 17,500 items each day. In India, it is currently the 13th most visited website. Its success has been because of its first mover’s advantage. But now what? As the time passes and competition increases the advantage is disappearing very fast. The only advantage they seem to have now, is the capital raised from the investors, but considering how lucrative market India is, it won’t be long that competitors will start getting similar, if not more funding from international investors. So what is the next goal for Flipkart?
Idea
Flipkart’s current vision is ‘To become Amazon of India’ and their mission revolves round ‘Providing delightful customer experience’. Considering Flipkart is one of the most looked forward technology company of next decade and Amazon has already entered Indian market there is a huge need for them to rework and revitalize on their long term goal and vision and develop a new Brand idea for coming future. The store started with selling books and in 2010 branched out to selling CDs, DVDs, mobile phones and accessories, cameras, computers, computer accessories and peripherals, and in 2011, pens & stationery, other electronic items such as home appliances, kitchen appliances, personal care gadgets, health care products, air coolers, school supplies, office supplies, art supplies, apparel & life style products to its product portfolio.
Competencies
Flipkart has launched its own products range under the name DigiFlip, offering camera bags, pen-drives, headphones, computer accessories etc. They are eventually expanding the range. In a very aggressive market penetration strategy, in 2010 they acquired WeRead, a social book discovery tool, in 2011 Mime360, a digital content platform company, and Chakpak.com, a Bollywood news site, in 2012 Letsbuy.com, India's second largest e-retailer in electronics. They have recently started a new initiative, Slash n, the Flipkart Technology Conference, it reflects Flipkart’s culture that Knowledge is meant to be shared and encourages an open platform for technologists to unite. They are also now implementing Oracle Financials, the first major enterprise software. Innovative mindset is one of the most important competencies of Flipkart. The ground breaking cash on delivery system, 30-day replacement policy, Free shipping etc. has been talk of town and been copied by all the competitors. Tremendous customer focus and dedicated after sales service has helped them to make their own place in the hearts of the customers. It’s a price oriented country and a price oriented market, up till now Flipkart has been very successfully playing on the price factor to grow their revenue.
Personality
Flipkart's advertisements portray children as grown-up protagonists who try to persuade customers to shop on Flipkart. The campaign became an instant hit and has been successful in building a huge awareness for the brand. Initially the tagline was "The Book Store at Your Door" which then changed to "The online Megastore!" Flipkart is known for its good website design which has evolved over years and has become more easy to access and more customer friendly. Effective use of online and digital marketing as well as developing through word of mouth has been crucial to Flipkart.
More than what meets the eye
Inventory: Flipkart is increasing their inventory and there is a huge growing return of the goods from customers, 30-day returns no questions asked policy for the customers is back firing for Flipkart. Aggressive inventory acquisition is also adding up to the problems. Some distributors are complaining of delays in payments. Flipkart maintains these delays are because the software it uses to maintain financial records are being updated.
Ownership: There are many suspicions about the ownership of the company. May people think Tiger Global acquires stakes, understand the real metrics of private companies, and then sell them to the public through an IPO just before that advantage disappears. What is the composition and function of the board at Flipkart is still a secret.
HR disaster: Many international experienced executives joined Flipkart on the top posts like HR director, VP finance etc, but mysteriously quit within a year. There is no openness in the system and only the group of people close to the Bansals used to take decisions, they all were from IIT Delhi.
Flyte Music store: In 2012, they launched Flyte Digital Music Store, a legal music download service like iTunes , but recently they closed the service down to cut the costs. They have also started to raise prices of the books from past few months.
FDI Regulations: On November 2012, Flipkart became one of the companies being probed for alleged violations of FDI regulations of the Foreign Exchange Management Act.
Future opportunities
People don’t hate FK, they do trust FK, they also like FK, some of them love FK, then how to build further? The next phase of Flipkart is going to be full of competitive and corporate sustainability challenges and the most important is that they don’t get the inertia of the success.
Adolescence: Filpkart brand is in a transition phase, it has grown from a hyperactive child phase to more grown up but an awkward stage of adolescence. In the first 5 years of the brand, it has a very fast growth rate especially the technology company. It is exploring its full potential, but the next age of adolescence in this phase the brand faces new challenges and has to change itself, they have to take precautionary measures that they don’t get laid back because of the success and also prepare for the next war with the big players. Flipkart brand can use this as an opportunity to establish itself as a successful brand in the market because hence forth it will not be called a start-up anymore.
Revising the vision: Now when Amazon is entering India, Flipkart has a great advantage over Amazon in terms of distribution and logistics networks, etc. Flipkart’s vision was to become Amazon of India. In 5 years time, with the biggest market share, it has already achieved it. Now, what do they stand for? Indian Amazon? Don’t they need to have their own identity? Now Flipkart is not just an objective, to become someone, I think now it’s time for them to derive the big brand idea from the expectations and experiences of the stakeholders, employees and the customers and rebuild the vision for Flipkart. This will be a long research oriented exercise and a full-fledged rebrand project, but it will clearly define Flipkart and its objectives to be achieved in the coming decade as well as armor itself for upcoming challenges. This exercise will also be able to give a bigger purpose to Flipkart than just increasing sales and profit making. It will also motivate the current employees and retain them for longer period which has been a challenge for Flipkart.
IPO: Filpkart is thinking of going for an IPO in next couple of years, but it’s going to be very challenging for them. As, the existing private investors would sell their shares to the public, reducing the company’s ability to raise funds for itself and the strategy for the IPO will have to be totally different than the strategy they have previously used to get the private investors. The profits are the only way public will invest will buy the IPO. As of now Flipkart has not been able to show substantial profit figures. Nevertheless IPO is a great opportunity for the Flipkart brand, IT demands a new kind of trust in the minds of the people, this trust will not be based on the customer service but will have to be based on the overall performance of the brand, so there is an opportunity for the brand to refresh itself at this moment and rethink its brand future aligned with the IPO.
Going global: Be the first ever Indian ecommerce business to go global. The world is looking towards emerging economies and what they can offer to the world. Why not be a pioneer? Start small and broaden the horizons. Indian price sensitive mentality and conscious spending patterns will always be a barrier for Flipkart to reach its financial break even soon and will have to depend on external funding in order to sustain. Going global will increase the cash flow many fold. Bansal’s had worked for Amazon before and also had exposure to International markets. Flipkart has an aggressive acquisition strategy, why not acquire an ecommerce company outside India? This will also build more trust in the minds of existing consumer and kill the competitive edge which Amazon is going to have being a International player. Flipkart will be able to see eye to eye with Amazon as the competition heats up. It will also be a perfect strategy for the upcoming IPO that they are planning and build a long term goal / objective for Flipkart. One would feel, this is a risky strategy at this moment in time with a global slowdown and world looking towards India as a new growing market, why would one not concentrate here and think of going global? But in long term it will be proved that this was the most appropriate decision taken at most appropriate time.
Rebuild trust internally: Flipkart has faced huge flak in terms of internal employee trust. Ex-employees have complained that, there is no openness in the system and only the group of people close to the Bansals used to take decisions. There is an urgent need to change this perception. No company in this modern business scenario can have an authoritarian mind set, especially if they are going to have an IPO they should have more collaborative approach towards their peers. Although FK have tried to copy the playfulness and other elements of cultural environment from the international technology companies like Google and Zappos, they have not been able to imbibe the values which they have on their website. This can be actually done with a uniquely designed culture change program for the top management (including Bansals) making them understand that the culture should be developed, values should be derived and cannot be copied from someone else. The factors like employees of Indian origin, diverse personal cultures etc will play a big role in defining this new culture which will be totally different than the international companies but will be totally relevant to Flipkart. It will also help in attracting amazing talent which is one of the most important assets of this business.
Build the market: Previously, Japanese people did not drink coffee. Nestle introduced coffee flavored ice cream in the Japanese market for kids so that the future consumers will have a taste and affection towards coffee and that will open a new market for Nestle after 20 years. Flipkart sells mobiles, but there is a fantastic opportunity which it can use to build the market. Simple question to be asked is: who is going to buy from Flipkart in future, the smartphone and internet users, Filpkart has a great opportunity to invest just now to develop this market of the first time mobile smartphone buyers. If the customer gets an exclusive deal from Filpkart for his smartphone / tablet etc he will have a positive perception about Filpkart and will use that same smartphone to buy other things from Filpkart. They must tie up and have exclusive contracts with mobile companies and telecommunication & broadband service providers. They can also develop programs for educational institutes, not with a objective of revenue generation but to develop their future customers / employees.
(Source Disclaimer: All the information has been taken from various articles and reports available online.)
