Launched in October 2007 by Mr. Sachin Bansal and Mr. Binny Bansal, Flipkart is one of India’s leading e-commerce marketplace with over 80 million+ products spanning across 80+ categories. It is headquartered in Bangalore, India and has more than 30,000 people working for it. Initially, it sold only books through its website but after its expansion, it started dealing with products like kitchen appliances, furniture, lifestyle products, fashion apparel, stationary supplies, electronics, health care products, and e-books.
Flipkart’s online platform is based on a Business to Consumer model. Flipkart allows various sellers from across the country to sell their products under different categories and this provides shopping opportunities to the Indian consumers via its online and app platform. Amount to be charged is determined after looking at the innumerable expenses like transport expenses, supplier expenses, packaging costs, courier charges, shipping cost, office and maintenance expenses, discount allowances, depreciation, taxes, advertisement expenses and many other expenses. After a sale is made, the seller gets a certain amount after the deduction of the commission by Flipkart. This percentage of commission might vary based on the product and the sales type.
Flipkart’s model has two main components: Inbound and Outbound logistics, and Operations. They have streamlined their supply chain model, strategically built warehouses and developed a strong distribution capability. These components are well integrated to each other by a good strategy and organizational structure. Flipkart’s model can be easily copied and hence the only sustainable competitive advantage for Flipkart is its operations infrastructure and logistics framework. Since investment in both are very high, it’s difficult for new companies to enter and replicate this structure. As part of their acquisition strategy, they acquired companies like Myntra, Jabong, Appiterate, Letsbuy, Mine360, chakpak.com, WeRead and the latest one being UPI-based payments start-up PhonePe. These companies are helping it in enhancing its functional capabilities. Like for example, Flipkart bought Appiterate to strengthen its mobile platform and Myntra and Jabong to expand its branded apparel section. The ‘Big Billion day’, ‘ No Kidding, No Worries’, ‘Shopping ka naya Address’, ‘Shop Anytime, Anywhere’ are the successful advertisement campaigns that helped the company in creating that an awareness and trust for their website amongst the Indian consumer base.
Amazon and eBay have outsourced their logistics process and hence have a far better coverage than what Flipkart currently has. Due to the stiff competition in this market, the cost of retention for a customer is fairly high for Flipkart. And since there are a lot of players in this market, buyers have a lot of options to choose from for the same product, just the price being the variable factor.
As part of its future plans, Flipkart can look at more feasible options for expanding its operations in possibly other countries. By working on the optimization of the supply chain process they can manage the losing sales on account of not making a product available in a particular area. A recent law passed regarding 100% FDI by the Government of India, have given a chance to players like Flipkart to take expand their categories and acquire more customers.
After having a backing of around 16 investors and $4 billion in cash reserves, Flipkart is valued at more than $11 billion as on date. It hosts about 1 lakh sellers, the registered user base of over 100 million people, and accounts for over half of India’s online smartphone sales and fashion market. It is in its pursuit now to win the all-or-nothing battle against the world’s most inventive company, Amazon.