T h e F l i p k a r t P h e n o m e n o n -

R e v o lu t i o n i z i n g O n l i n e S h o p p i n g i n I n d i a

A C a s e s t u d y

By

Naushad Sultan Talukdar Email-id: naushadnst@gmail.com

T h e F l i p k a r t P h e n o m e n o n - R e v o lu t i o n i z i n g

O n l i n e S h o p p i n g i n I n d i a

Flipkart is an Indian e-commerce company synonymous to online shopping as LIC is to life

insurance in India. In its initial years, Flipkart focused on online sales of books but it later

expanded to electronic goods and a variety of other products. The cash-on-delivery model

adopted by Flipkart has proven to be of great significance since the credit card and net banking

penetration is very low in India.

E-commerce Revolution

The e-commerce is changing economy and affecting all aspects of business globally. Today, no

company can afford to ignore e-commerce. It is even predicted that e-commerce will become

part of the „core‟ business functions just like accounting, marketing, etc. India is currently in

the midst of an e-commerce and m-commerce revolution. The arrival of the Internet, followed

by the escalating growth of Web-based businesses is leading to e-commerce both on the

B2B and the B2C sides. The e-commerce trends in India are in perfect accordance with the

sweeping changes taking place in the global markets.

The sector started in India during 1999 with companies such as Firstandsecond.com and Fabmart

aspiring to become the Amazon of India - the biggest online provider of books. Rediff was one

of the earliest companies to become a part of the e-commerce wave in India and started

operations with knick-knacks. At that point Apnaloan was one of the leading providers of online

loans and Sify.com had become a part of the industry as well. Shaadi.com, a leading marriage

portal, also started its operations at around that time.

Some of the aspects of Indian e-commerce that are unique to India (and potentially to other

developing countries) are Cash on Delivery Direct Imports. Cash on Delivery as a preferred

payment method. India has a vibrant cash economy as a result of which 80% of Indian e-

commerce tends to be Cash On Delivery. Direct Imports constitute a large component of online

sales. Demand for international consumer products (including long-tail) is growing much faster

than in-country supply from authorized distributors and e-commerce offerings.

FLIPKART.COM

History of Flipkart.com

Sachin Bansal & Binny Bansal graduated from IIT-Delhi with a degree in Computer Engineering

was working forAmazon.com before quitting and launching their own company Flipkart.com.

Flipkart was launched in 2007 with the objective of making books available to everyone who had

internet access initially they used „word of mouth‟ marketing to popularize their company. A few

months later, the company sold its first book on flipkart.com-John Wood‟s Leaving Microsoft to

change the World. Along with time, it later diversified across various categories including 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 etc. Further

in 2012, Flipkart added A.C, air coolers, school supplies, office supplies, art supplies & life style

products to its product portfolio.

Flipkart is rapidly expanding its network of warehouses, distribution centers, procurement

operations and 24/7 customer support teams. The company has its own delivery network in

37 cities and is set to expand this in the current financial year. With a team of around 4,800

members, the company operates from offices and warehouses in seven Indian cities.

Today, as per Alexa traffic rankings, Flipkart is among the top 20 Indian Web sites and has been

credited with being India's largest online bookseller with over 11 million titles on offer. Flipkart

broke even in March 2010 and claims to have had at least 100% growth every quarter since its

founding. It has registered sales of nearly 2.5 million items across all categories and sells more

than 20,000 units per day or 14 items per minute. With path-breaking features like Cash/Card on

Delivery, 30 Day replacement policy and EMI options.

Marketing Efforts

Despite of being on online platform, Flipkart has started with word of mouth marketing strategy

because Flipkart was started on a modest budget. The initial capital was sourced from personal

money and did not have a huge marketing budget. Hence it was relied heavily on word-of-mouth

marketing to promote the site. Moreover, when it comes to mediums like e-commerce, word-of-

mouth marketing works extremely well as customers rely on the experience and feedback of their

friends and peers before they try out a site.

India with its growing number of users makes Facebook a very potent force for marketing for

Ecommerce websites, flipkart is no more exception in this case. Flipkart in its social media

initiatives aims at facilitating an easier conversation channel for customers and users.

Conversations are to the point and are targeted at specific issues, thoughts and ideas.

Flipkart.com began activities to make its presence felt on Facebook and Twitter about a year ago.

The company has also used LinkedIn to connect with people. The popularity of Flipkart has

grown through recommendations, people recommending the site to their family, friends and co-

workers. And what better platform than social media to leverage „word-of-mouth‟! Flipkart.com

recognized that using social media is about being human. The people who manage their channels

infuse Flipkart's culture and personality in what they do or say in tandem with their own

personality.

“Social Media have feedback mechanism built into them, which needless to say benefits both the

customer and the brand,” says Mr. Sachin Bansal, CEO and Co-founder of Flipkart.com. “What's

key is to listen to what is being said about you (as opposed to hear), and for that matter being

said directly to you. Users will be brutally honest if you give them an opportunity. The onus then

lies solely upon you and your brand, about what you do with the feedback. That's where we've

seen tremendous benefit.”

“Transparency and Honesty is the key. If you value these traits as an organization, Social Media

will help amplify it,” adds Mr. Bansal.

Flipkart very wisely used SEO (Search Engine Optimization) and Google Ad-words as the

marketing tools to have a far reach in the online world

There were particularly 2 things that are worth mentioning.

a. Yahoo News: It was really interesting the risk they took, until last year Flipkart had a feed of

Yahoo News on its product pages to increase the keyword density and introduce „original‟

content on the page, as the product description across all books sites is same. This was removed

later as it was violating the Yahoo‟s copyright on using the service for a commercial site.

b. We Do Not Sell Used Books: This is one more SEO trick. If we check the

Waybackmachine we will find the following text.

We Do NOT sell old books or used books. All the books listed at Flipkart.com are new

books.

The books listed at Flipkart.com are NOT available for free download in ebook or PDF

format

The magic of this text is that if one search for “<book name> free ebook” or “<book name> pdf

download” would always get Flipkart among top results.

as a result Flipkart.com has a strong presence on Facebook, with a staggering number of fans.

The company has more than 1,112,431 fans, 15,547 talking about this and has used easy,

interesting conversations to engage them. Flipkart.com has more than 22,500 followers on

twitter. Flipkart.com‟s Alexa global ranking is 262 while its India ranking is 13.

TECHNOLOGY ADAPTION

Flipkart Drives Innovation through Intelligent use of IT

The objective was to allow Flipkart‟s engineers to launch multiple versions of its website in real

time, IT drives a new level of innovation.

The Main idea:

Amod Malviya, VP engineering, Flipkart, that came with a caveat. “We had to be careful to not

let our rapid growth kill the innovative spirit of the company,” he says. That‟s a valid fear. In the

business of innovation, complacency holds no ground. Malviya knew he would have to empower

users with new tools to innovate and stay ahead of the pack. But creating a new process wasn‟t

the solution. “Processes force people to do things in a certain way, killing their creativity. If you

remove the bureaucratic headache, people are encouraged to think freely," says Malviya. While

he admits that this approach opens new doors to risk, he knows that it also encourages a fearless

culture of innovation—a must-have in the e-commerce business.

The Project:

With that goal in mind, Malviya implemented a framework. The framework has two

components: One measures the performance of the website through various defined metrics. The

second, more interesting one, uses an A/B framework (used to test the success of web marketing

campaigns), allows multiple versions of the site to be live simultaneously. This helps the

company conduct live experiments by siphoning off a small portion of the traffic and studying

the results. Both components work in tandem. The metrics tool is a dashboard that measures the

website‟s performance on various parameters. For example, if the transaction rate falls below a

certain limit, systems are immediately alerted. With the A/B component, Flipkart‟s engineers can

also rapidly implement their ideas. “When someone proposes a new idea, a lot of precious time is

spent debating what-if scenarios. Now, we can implement an idea, while mitigating its risks.”

For example, whenever an engineer wants to change the design of the homepage, the A/B

framework redirects 10 percent of Flipkart‟s traffic to the new design. They can evaluate the

impact of the change with the metrics collection tool. If it leads to a dip in sales, they can

immediately roll it back, and less than 10 percent of traffic is impacted.

“We started streaming metrics on large screens on the engineering floor so that engineers could

track performance in real time—unlike most websites that review their performance only once in

a week or a month,” says Malviya.This has been a huge hit with business users who can now

float new products and toy with business ideas.

Flipkart Scales PHP

Flipkart generates thousands of sales every day which means the engineering team that keeps the

show going have a tough task to do. Even a minute of downtime would mean serious loss of

business and the responsibility is quite high on the engineering team. So the Engineering team at

flipkart scales PHP to manage a highly scalable environment.

Flipkart uses Open Source Technology which is flexible, inexpensive and well trusted. Flipkart

Run on LinuxHA instead of expensive hardware LBs. The site was moved from Apache to nginx

for better performance and as a results 10x improvement in performance.

Flipkart Supply Chain Model

The role of logistics in the successful functioning of an e-commerce venture is indispensable. All

these innovative services will be ineffective if the products do not reach the customers on time.

Here are some Best Practices of the Supply Chain of Flipkart:

Building the Suppliers base

The Company has established a network of more than 500 distributors and only stocks frequently

ordered items. Items like the 'Long tail' are almost always sourced from suppliers in real time and

as and when the customer places an order.

Building Infrastructure for Operations

The Company has 4 offices in 4 metros cities with more than 500 employees. Warehouses of the

company are located in 7 cities including the metros. Company has tie-ups with more than 15

courier companies like Blue Dart, First Flight etc. to deliver their products and Indian post for

areas where courier do not reach.

The Process of Supply Chain

The first step in buying the products like books online from the Filpkart.com site by making

payments using payments options like credit/debit card, cash-on-delivery, net banking,

cheque/DD and money order and enter the phone number and address where the items need to be

delivered. Depending on items purchased they are packed and shipped accordingly for example

mobile phones and books are packed differently as per requirement and also all items have

transit insurance against theft and damages that may be caused while they are in transit. Flipkart

bears the cost of delivery and this make them give a reason/motivator for improving efficiency at

every point of supply chain. This also makes them differentiate from their competitors.

Now for delivering the items depending upon the area where the item need to be delivered either

courier, Indian post or own internal logistics arm is used. The delivery time varies between less

than 24 hours and 3 weeks depending on the location and availability of the product like the

products which are imported take 3 weeks time to get delivered to the customers. The inter-city,

trans-zone deliveries are made using air cargo. For satellite cities and others in close proximity,

products are transported overnight by train or truck. For the local parts of the cities where the

warehouses of the company exist products are delivered using two-wheelers, bicycles, or on foot

depending upon the proximity of the place and because of this many of the deliveries are made

within a day of the order being made. All the Team Members have been trained to work

efficiently to meet customer expectations.

Use of Information system

The Company use sales to predict the inventory levels. The warehouses are split into multiple

areas — inventory, packing, shipping and so on. The stocks are replenished every 24-48 hours.

In the Back End, Flipkart stores details of all the transactions that need to be carried out. They

have an understanding with their associates for order tracking, reconciliation and MIS

(Management Information Systems) reports. The private courier companies in turn have their

own ways of tracking every package. The customer is also updated about the status of his

shipment via message, email or through the website. When the product needs to be returned then

due to the companies understanding with the courier companies it happens without any disputes

or problems efficiently. Flipkart takes care of the after-sales needs of its customers with regard to

delivery of an item or addressing grievances including delayed delivery by the logistics partner,

or addressing issues when an incorrect product is delivered. In the case of electronics, warranty

and after-sales service is largely the responsibility of the manufacturer. Flipkart does however

facilitate interaction between the customer and manufacturer/service center as and when the need

arises.

Flipkart Acquisition

Flipkart has acquired many organizations for expanding its business and to give a good experience to its

customer in online shopping.

Year Name of the

Organization

Description

2010 WeRead A social book discovery tool. The stated goal was to give Flipkart a

social recommendation platform for buyers to make informed

decisions based on recommendations from people within their social

network.

2011 Mime360 Mime360, a digital content platform company

2011 Chakpak.com a Bollywood news site that offers updates, news, photos and videos.

Flipkart acquired the rights to Chakpak‟s digital catalogue which

includes 40,000 filmographies, 10,000 movies and close to 50,000

ratings.

2012 Letsbuy.com Letsbuy.com is India's second largest e-retailer in electronics.

Flipkart has bought the company for an estimated US$25

million.Letsbuy.com had been closed down and all the traffic of

Letsbuy is diverted to Flipkart

Statistics

High Impact Search Queries for flipkart.com Popular queries that are relevant to this site and are actively targeted by competitors advertising on search engines. Click on queries below to discover who is advertising for these queries.

Query Impact Factor

Query Popularity

QCI Query Competition index

buy books online 3.98 32 57

flipkart.com 3.59 37 16

online shopping 2.85 48 54

buy books 1.76 27 58

www.flipkart.com 1.21 29 14

Watches for men 1.13 30 48

samsung galaxy s3

1.10 65 26

buy laptops .85 19 59

Flipcart.com .79 26 15

Demographic Information

Audience Demographics for Flipkart.com

Top Search Queries for Flipkart.com

Query Percent of Search Traffic

flipkart 20.72%

flipcart 1.74%

Flipkart.com 1.19%

www.flipkart.com 0.46%

Buy books online 0.36%

filpkart 0.29%

Flipkart.com 0.27%

user visits following sites immediately preceding

flipkart.com

User visits following sites immediately after

leaving flipkart.com

Flipkart Revenue

*

*Revenue for the FY 2011-2012 is expected to be 5000 million

What makes Flipkart a super successful ecommerce portal?

Customer Service

They always strove to provide great customer service. Flipkart customers are more happy than

with some of their competitors like Tradus.in, Indiaplaza.com. The founders' passion for the

consumer Internet space manifests itself in the brand, which is synonymous with customer

service and satisfaction. „Don't count your customers before they smile' is the company's

operating mantra.

First Mover Advantage

Flipkart still enjoys the top-of-the-mind brand recall as far as buying books is concerned. Other

portals such as Uread and Dial-a-Book are still struggling to register their brands into the

consumer‟s mind. Over the years, Flipkart has diversified quickly; they now sell electronics to

mobiles to home appliances.

Cash on Delivery

One area where Flipkart has scored strong is reading the virtual Indian consumer mind. Though

the ecommerce user has matured, a large segment is still hesitant to make transactions using

credit/debit card. The cash-on-delivery model has undoubtedly got them with going with the web

conservatives.

Well-Marketed

It initially started with word of mouth and social media, and the Bansals have carried on the

momentum well. Apart from investing in technical, operational and logistical capabilities,

Flipkart, like any other strong brand, have invested a lion‟s share in advertising, thus giving the

brand a significant visibility. Today, Facebook likes stand close to 1 million.

Easy to Buy

Again, Flipkart has understood the factors that dissuade an online user in India, by allowing them

to buy products without registering. Alternatively, there‟s Facebook and Twitter sign-in. This

makes its user to buy a product without registering and remembering another online password.

Moreover, one get a 15-20% discount on every book purchase and free shipping for every order

of more than Rs. 200. I can tell from my own experience that the delivery is superfast if the

product is in stock.

E-commerce in the DNA

A critical factor in Flipkart‟s success, especially during the initial years, is that the founders are

ex-Amazon employees, hence bringing in the required expertise and skillset needed to run and

grow an ecommerce portal. Sure they possess great entrepreneurial skills too, which when

blended with vertical knowledge, has spun great success for the 5 year old Flipkart.

Customer Retention Rate

Flipkart's reason of success is that it has a great customer retention rate, it has around 15 lac

individual customers and more than 70% customers are repeat customers i.e. they shop various

times each year. Acquisition of customers can cost five times more than retaining current

customers. The company targets to have a customer base of 1 crore by 2015.

Future Prospects:

India has an internet user base of over 100 million which shows that the e-commerce industry

with the increased internet penetration will be the service sector's growth engine in India. Among

the challenges faced by the industry is its dependency on the service providers like suppliers,

logistics service providers, etc. whose service in not up to the expectation and are affecting the

service of the online companies. Seeing the prospects of growth a lot of new online retailers have

come up and there is a price war going on to attract more and more customers which is putting

pressure on the profitability of the companies so it has become extremely important to manage

cost to increase profits which is only possible by building an efficient backend- a nationwide

delivery network, warehouses , inventory management , logistics, efficient teams to manage all

this therefore supply chain management becomes an important factor on which companies

depend to sustain in this industry. Flipkart obtains funding from various sources which is being

utilized by the company to include more diversified product, innovation, for strengthening

supply chain capacity and upgrading technology platforms, including automation at warehouses.