Name: Prateek Tripathi Department: Department Of Business Administration Teacher: Mr. Sanjay Medhavi Subject: Information Management in Business Year: 2012-14 Course: MBA II (Section-A)
I am thankful to our learned teacher Mr. Sanjay Medhavi (Department of Business Administration). This Information Management in Business project entitled “Management Information System of flipkart.com” has been possible through the efforts of our respected teacher. I am thankful to sir for giving essential and useful guidance from time to time in understanding the concepts.
Prateek Tripathi MBA II (Section-A)
INTRODUCTION Flipkart is an electronic commerce company which was established by Sachin and Binny Bansal in 2007 with the objective of making books available to everyone who had internet access. Now it is among India‘s largest online retailers with reported sales of Rs 12 billion for year 2011-12. Sachin Bansal and Binny Bansal both are alumni of Indian Institute of Technology Delhi. They started this company after quieting their jobs in Amazon.com with a vision to be one of the largest multi-category e-commerce destinations in India, with a strong focus on customer service. Along with time, Flipkart diversified across various categories including movies, music, games, mobiles, cameras, computers, healthcare and personal products, home appliances and electronics. According to the co-founder Sachin Bansal, ―We started with books because they are comparatively easy category products to sell online. They do not require huge inventory maintenance, are easier to negotiate supplier terms and profit margins are high.‖ Also since books are low value items, inducing customer trial was easy. It was a safe option to start off with books, given their appreciation in e-commerce the world over. Now Flipkart have about 11.5 million book titles, 11 different categories, more than 2 million registered users and sale of 30,000 items a day or 14 items per minute which makes it India's answer to Amazon. Currently, Flipkart has registered sales of nearly 2.5 million items across all categories.. With pathbreaking features like Cash/Card on Delivery, 30 Day replacement policy and EMI options, Flipkart has now made it possible for anyone across the country with internet access to shop online. The Flipkart experience is characterized by the intuitive user interface, free shipping and low prices. As a testimony to the superior customer experience, the company has consistently recorded repeat purchase rates of more than 70%. Backed by a significant funding of $31 million, Flipkart is rapidly expanding its network of warehouses, distribution centres, procurement operations and 24/7 customer support teams. The company even has its own delivery network in 13 cities and is set to expand this to 25 cities by next year. With a team of around 2500 members, the company operates from offices in Bangalore, Mumbai, Delhi, Chennai and Kolkata.
MANAGEMENT TEAM Mr Sachin Bansal (CEO & Co-founder): Sachin spent his early years in Chandigarh. He graduated from IIT-Delhi with a degree in Computer Engineering. In 2006 he joined Amazon.com in India which he later left to set-up Flipkart. As CEO, Sachin oversees all the customer facing activities of the company ranging from technology to marketing. He is also in charge of Flipkart‘s corporate divisions which include the finance and legal departments. Mr Binny Bansal (COO & Co-founder): Born and raised in Chandigarh, Binny went on to get a degree in Computer Engineering from IIT Delhi. He had a brief stint at Amazon.com before taking the entrepreneurial plunge with Flipkart. At Flipkart, Binny oversees all operational activities that come into play from the time the customer places an order till the time of delivery. This spans across divisions like warehousing, logistics and customer support. Mekin Maheswari (President, Technology): Mekin completed his B.E. from PESIT Bangalore in 2002. He started his career with Yahoo! and then went on to join Ugenie where he created weRead, a successful social network around books. At Flipkart, Mekin is responsible for overseeing the company‘s technological operations. These include innovation and application of technology in areas starting from supply chain to website management. Sujeet Kumar (President, Operations): Sujeet completed his engineering from IIT Delhi. He worked in the KPO industry and orchestrated several freelance projects before joining Flipkart in 2008.At Flipkart he is responsible for overseeing supply-chain, warehousing and logistics. He is also in charge of business development for all categories.
HOW IT ALL STARTED 1) Founders: The founders of the company Sachin Bansal & Binny Bansal worked forAmazon.com before quitting and founding their own company. 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 Woods-Leaving Microsoft to change the World per Alexa traffic rankings; Flipkart is among the top 30 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.
2) Acquisitions: Initially funded by the Bansals themselves with Rs 4,00,000, Flipkart has since then raised two rounds of funding from venture capital funds Accel India (in 2009)and Tiger Global management (up to the tune of US$20 million or Rs 100 Crore) in 2010.
SERVICES & PRODUCTS OFFERED BY FLIPKART A) WHAT THEY DO RIGHT: User Interface: Flipkart has a wonderfully simple user interface that allows loads quickly, and offers a ‗lite‘ version for slower internet speeds too, rather than the flash heavy interfaces of other e-Commerce websites, that improves the customer experience on the website. Cash on Delivery, EMI, and 30 day guarantee: The varied payment schemes provided by the site like Cash on Delivery, EMIs and the 30 day guarantee scheme for products go a long way in countering the general tendency of the Indian Consumer to shop in traditional shops than online. Payment Interface: Rather than going in for the confusing CC Avenue payment gateway that most e-Commerce websites opt for, Flipkart has a much more reliable Axis Bank Payment Gateway that is easier to use. Variety: The most important thing for a book store is the variety. A consumer who finds a rare title is definitely bound to return back to the website for further orders, and Flipkart with their variety have gone a long way in ensuring this. Deliveries and packaging: Flipkart is renowned for its prompt deliveries within the promised deadline, and most of the time delivers earlier than promised. It is this customer focused approach that has helped Flipkart keep their noses ahead of the competition. Customer Service: Flipkart‘s business model is based on repeat purchases and retaining customers and has built a highly responsive customer service team that responds to all queries within 24 hours. Their active presence on Social Networking sites and ensuring timely deliveries, with a smile, go a long way in ensuring success of their business model.
B) DOWNSIDE OF BUSINESS OFFERING: Search feature: The search feature on the website allows only a basic search, and not an advanced option that allows you to search by author name or ISBN etc. This proves to be a hassle when the name of the book is a common name.
Categorizing: Though Flipkart has a visible ‗category‘ wise catalogue for their books, it becomes pretty apparent that most of their titles are not properly catalogued. Buying in book shops generally happens when the customer spots the book in a particular category and gets interested in it, despite not having known the book previously. Flipkart‘s poor cataloguing eliminates the opportunity of such buys.
C) SCOPE FOR FUTURE DEVELOPMENT AT FLIPKART: International Shipping: A logical step ahead is to move into the sphere of international shipping – initially with Sri Lanka and Bangladesh, and start competing with their big brother, Amazon. Widening of Range in some product categories: There is an obvious scope for improvement in the product variety in some of the newly launched product ranges. Customised products and Gifts: One area where Infibeam.com, a competing company scores over Flipkart is their customised gifts through PicSquare. Though Flipkart offers an option of a gift wrap and a personal message for a nominal charge, the service is not quite apparent for first time users. Customized products and gifts is another area where there is scope for future development. Same-day-Shipping: Flipkart could have different versions of their website based on the location of the customer that offer different shipping times for their products. Some of the bigger cities could soon be equipped with sameday shipping considering that Flipkart has a strong in-house logistics service. Product Pages: Flipkart could look at having better product pages for individual items. Some items like a Cell phone or a camera or a Microwave oven would be better projected with a 360 degree image viewer. This would
offer a more intuitive view for the consumers than the photographs that are on display now. Flipkart could also look to develop their product pages in a better manner than they are right now, with lesser unnecessary data being displayed. Customised Delivery Dates: As an extension to the gifting service, Flipkart could look at offering customer chosen delivery dates for the same, beyond a threshold date that Flipkart can provide.
INTERESTING THINGS ABOUT FLIPKART BUSINESS MODEL Flipkart sells almost 20 products per minute. It has clocking daily sales of Rs.2.5 crore ($ 0.5 MN) and the growth rate has been 100 percent quarter on quarter According to Sachin Bansal, CEO of Flipkart, ―The interesting part is that around 60 per cent of Flipkart‘s orders are cash or card on delivery. The cash on delivery service has helped a lot of traditional consumers turn to online shopping. The model has unbolted the lock to a whole new customer base which hasn‘t been exposed to the benefits of plastic money as yet or those with a default technological handicap. From browsing to delivery, you can track your order. You can pre-order an unreleased book, get good prices, even the customer service is very strong.‖ Raise any issue and it‘s efficiently resolved. Flipkart‘s biggest draw has probably been the huge discount it offers - much to the envy of offline stores. Though all bookstores get up to 50-60 per cent discounts from publishers, the low overheads - one of the numerous virtues of online stores - enables Flipkart to pass on the savings in the form of discounts. Flipkart started with books, but now deals in 12 product categories. As per data, they have 80 per cent share of the online book market and according to Flipkart CEO, India is a huge market, there is much scope for online e-stores in future. According to an Associated Chambers of Commerce and Industry of India (ASSOCHAM) survey, the online retail market in India may grow to Rs.70 billion (over $1.30 billion) by 2015 from Rs.20 billion in 2011 as internet access improves.
ROLE OF LOGISTICS IN E-COMMERCE 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 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.‖
FUTURE FOR E-COMMERCE India has 11 million online customers now which will increase to 30 million by 2015 which shows that the e-commerce industry with the increased internet penetration will be the service sector's growth engine in India. The industry's size is expected to increase to $11.8 b. 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. To solve this issue efforts are to be made to educate these service providers the importance of using technology and provide them incentives to use these technology and shift their focus on to the customers.
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 obtained funding from Tiger global management in 2010 which is being utilized by the company for strengthening supply chain capacity and upgrading technology platforms, including automation at warehouses.
CONCLUSION On the whole, Flipkart, through its methodical approach of expansion of product categories, rather than starting off as a Jack of all trades is slowly emerging as the Amazon of the Indian e-Commerce arena. With a strong logistics and customer focused approach, Flipkart is slowly taking steps into becoming a giant in the e-Commerce space. Future scope for development includes wider range of products and international shipping etc.
REASONS FOR SUCCESS OF FLIPKART 1) In the traditional way, Flipkart also started selling books online as many ecommerce startups have done, for the simple reason that supply chain dynamics and payment cycle suits best. So Flipkart scaled the cash on delivery system to retain customers. Pricing right is also important. 2) To scale sales, one method Flipkart bets is on increasing order value per customer by offering the customer more selection and relevant uptakes. Giving reason to come back is very important. The one fix Flipkart has done successfully was building its own delivery in 30 cities after finding that once an item leaves the warehouse, the affiliate courier companies did not deliver to customers. The pilot in Bangalore helped find repeat customers to the extent of 50%. By 2012, more categories will be added to Flipkart. 3) A misstep that Flipkart took was betting on B2B sales for books. The assumption was that libraries and universities will buy in bulk. It turned out that the bulk buyers would dictate terms and so it quickly turned to scale B2C channel, which has proved to be successful. Scaling technology is also important to cater to growing demand.
REFERENCES http://logisticsweek.com/news/2011/03/not-only-words/ http://www.flipkart.com/about-us http://www.livemint.com/2011/06/16233030/Flipkart-raises-20-mn-fromTi.html Articles from Economic Times
