Flipkart
presents an interesting story of Indian entrepreneurship. A company started by
two IIT D graduates, Sachin Bansal and Binny Bansal, has become synonyms of
e-commerce in Indian Market. How did it happen? Before discussing this, let me
show you a brief timeline of Flipkart history.
Flipkart
started by selling books and in stages they have expanded to include almost
everything under the sun. Looking at their milestones provide a good insight
for entrepreneurs on how to establish their business. Let’s split the flipkart
story in different parts to understand what made flipkart India’s Amazon.
Small and focused
start
They started by selling books, which required small initial budget.
Since they were new in market and had no money for advertisement, they relied
on word of mouth publicity. And, for having an effective word of mouth they
kept the prices as low as possible. Now, people were getting books at lower prices
without taking pain of going to bookstores.
Surprise
customer through fast delivery
From starting Flipkart distinguished itself
with other competitors by having a super-fast delivery. Many times, people ordered
book and it reached next day itself. Indian consumer habituated of late
delivery in everything found it pleasantly surprising and went on a publicity
spree for flipkart.
Keep on growing
If we see flipkart’s timeline, they expanded their product category every year
after reaching break even. They were already getting a huge no. of page views daily.
Increasing product category ensured a 100% increase in revenue every quarter.
Cash on
delivery and Cash on Card
This was one of the most innovative and bold step
taken by flipkart. People in India were still skeptical about paying online. Getting
things without advance payment delighted customers. They can be more casual in
ordering now. In case they don’t like a product or find any defect, they can
cancel the order with zero risk. People without credit or debit card can also order.
It made online shopping affordable to everybody, which was a luxury earlier.
Range of Product
Flipkart boasts of having around 11.5 million book titles available in their catalogue.
It has almost all the brands available for other products as well. It is having
around 1 million tracks of 55 different genres in its music store. This fulfils
customer’s stated ,unstated and latent wants as well.
Organizational
Structure
Flipkart has focused equally in both operation and Technology.
Below is the top view of its Organization structure.
Till now,
it has been a great ride for flipkart. It is growing with a rate of 100% every quarter.
This has resulted in significant increase in operational cost. On the
operational front, company is facing issues pertaining to delay in delivery or
getting faulty products delivered. It faces significant challenge in reverse
logistics. It’s a big task to track unsuccessful orders, which are quite costly
to track. Flipkart is planning of bigger investments in supply chain and
technology to enable large warehouse and increase process automation. Flipkart
is also facing huge losses due to cash on delivery for mainly two reasons, 1st it makes cash flow routed through
courier companies, who charges a hefty
amount and 2nd there are more rejected orders due to customer fickle
mindedness. Recently, flipkart bought
letsbuy.com for $25 million. This all has made getting a good funding source
essential for flipkart. At the same time Bansal are having more than 30% of flipkart’s
shares, so they have very little to
offer for new investors. Recently, Bansals failed to get funding from General
Atlantic . They have not been able to get any big investor apart from their
first investor Accel India.
With bigger
players coming in the market, increasing cost of operation and chipping in
profit margins, it will be a tough road ahead for flipkart.
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