INTRODUCTION
Flipkart is an Indian e-commerce company headquartered in Bangalore, Karnataka . It’s being touted as India’s answer to Amazon. Founded by Sachin Bansal and Binny Bansal
(not related to each other) in Oct O ct 2007, Flipkart has catapulted to one of India’s most popular e-commerce sites and undoubtedly as the most popular online destination for books within a short span of three years. History
Flipkart was established in 2007 by Sachin Bansal and Binny Bansal, both alumni of the Indian Institute of Technology Delhi. They worked for Amazon.com before quitting and finding 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. Today, as 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. The store started with selling books and in 2010 branched out to selling CDs, DVDs, mobile phones & accessories, cameras, computers, computer accessories and peripherals, pens & office supplies, other electronic items such as home appliances, kitchen appliances, personal care gadgets, health care products etc. Interesting Statistics about the company
As of today, Flipkart employs over 4500 people
It experiences 2 million unit sales and 4 million unique visitors per month with sales growing at 25% per month, eyeing a $50 million run rate
With close to 11.5 million titles, Flipkart is the largest online book retailer in India with 80 per cent market share
It has a registered user base of two million customers and ships out as many as 30,000 items a day, clocking daily sales of Rs 2.5 crore
Flipkart is rapidly expanding its network of warehouses, distribution centers, procurement operations and 24/7 customer support teams. The company even has its own delivery network in 27 cities and is set to expand this even further by next year
What sets it apart?
With path-breaking 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%. Funding
The company was initially self-funded, with co-founders Sachin and Binny Bansal spending Rs 400,000 ($9056) to setup the business. They later raised two rounds of funding from Accel Partners and Tiger Global Management to the tune of $31 million, with the first round being around $10 million and the second round being $20 million
Acquisitions
2010
2011
2011
2012
WeRead
Mime360
Chakpak.com
LetsBuy.com
2010
WeRead, a social book discovery tool. The stated goal was to give Flipkart a social recommendation
platform
for
buyers
to
make
informed
decisions
based
on
recommendations from people within their social network. 2011
Mime360, a digital content platform company. 2011
Chakpak.com is a Bollywood news site that offers updates, news, photos and videos. Flipkart acquired the rights to Chakpak’s digital catalogue which includes 40,000
filmographies, 10,000 movies and close to 50,000 ratings. Flipkart has categorically said that it will not be involved with the original site and will not use the brand name.
2012
Letsbuy.com is India's second largest e-retailer in electronics. Flipkart bought the company for an estimated US$ 25 million
Business Results
Flipkart's reported sales were 4 Crore in FY 2008-2009, 20 Crore in FY 2009-2010 and 75 Crore for FY 2010-2011. In FY 2011-2012, Flipkart is set to cross the 500 Crore (US$ 100 million) mark as Internet usage in the country increases and people get accustomed to making purchases online. On average, Flipkart sells nearly 20 products per minute and is aiming at generating a revenue of 5000 Crore (US$ 1 billion) by 2015.
Locations
The company's headquarters is located in Bangalore's Koramangala neighbourhood. Flipkart has offices, warehouses and customer service centres across India. Warehouses are located in the following cities, often near airports.
Bangalore, Karnataka
Chennai, Tamil Nadu
Delhi
Kolkata, West Bengal
Mumbai, Maharashtra
Noida, Uttar Pradesh
Pune, Maharashtra
Kochi, Kerala
Products
Flipkart started with selling books. In 2010, they added to their catalogue media (including music, movies and games) and mobile phones & accessories. In 2011, product launches included cameras, computers, pens & office supplies, computer accessories, home and kitchen appliances, personal care, health care, gaming consoles, audio players and televisions. In November 2011, Flipkart launched a new Electronic Wallet feature that allows shoppers to purchase credit to their Flipkart account using credit or debit cards, and can subsequently be utilized to make purchases on the site, as and when required.
Later, in February 2012, the company revealed its new Flyte Digital Music Store. Flyte, a legal music download service in the vein of iTunes and Amazon.com, offers DRM-free MP3 downloads. Flyte offers browse by language options where users can download international as well as regional songs. Flipkart has listed the music based on its genre on the new music store and has given a lot of variety. Users can shop for tracks from various albums starting at Rs 6 on the store.
E-COMMERCE IN INDIA
E-Commerce - Electronic commerce or e-commerce consists primarily of the distributing,
buying, selling, marketing, and servicing of products or services over electronic systems such as the Internet and other computer networks. The information technology industry might see it as an electronic business application aimed at commercial transactions. It can involve electronic funds transfer, supply chain management, e-marketing, online marketing, online transaction processing, electronic data interchange (EDI), automated inventory management systems, and automated data collection systems. It typically uses electronic communications technology such as the Internet, extranets, email, e-books, databases, and mobile phones.
It can be in the following forms
Business-to-business (B2B)
Business-to-Consumer (B2C)
Consumer-to-Consumer (C2C)
Consumer-to-Business (C2B)
E-Commerce in India
India has an internet user base of over 100 million users. The penetration of e-commerce is low compared to markets like the United States and the United Kingdom but is growing at a much faster rate with a large number of new entrants. The industry consensus is that growth is at an inflection point with key drivers being:
Increasing broadband Internet (growing at 20%) and 3G penetration.
Rising standards of living and a burgeoning, upwardly mobile middle class with high disposable incomes
Availability of much wider product range (including long tail and Direct Imports) compared to what is available at brick and mortar retailers
Busy lifestyles, urban traffic congestion and lack of time for offline shopping
Lower prices compared to brick and mortar retail driven by disintermediation and reduced inventory and real estate costs
Internet commerce industry in India has seen manifold increase in the last couple of years, with the total market size increasing from Rs 19,688 crore by the end of 2009 to an estimated Rs 31,598 crore in 2010.
Growth of E-Commerce in India over the years (Figures in USD millions) 12000 10000 10000 8000
6790
6000 4230 4000 2000
3015 1750
0 2007
2008
2009
2010
2011
E-Commerce India 2012
India's e-commerce industry is primed for a shakeup as sales soar, valuations drop and the fitter among the companies gobble up weaker rivals. India's best-known and stronger online retailers are taking the lead in the consolidation race. After Flipkart announced last week that it is acquiring consumer electronic retailer Letsbuy, its biggest rival Snapdeal is in advanced talks to acquire a company that will give it a bigger presence beyond its strength in the group-buying market. Experts say that in 12-18 months, Indian market will see the leaders emerge. There will be a couple of multi-product generalists who will be successful and a winner in each single-product category. Thus, With the online retail industry in India pegged to reach $1.5 billion mark by 2015, ecommerce is just sizzling in India and we may soon see many more Internet companies achieving success similar to that of companies like Flipkart and Snapdeal.
Challenges ahead
However, the growth of E-Commerce is not devoid of challenges that the industry is confronted with, both global and local. As more global players enter the e-commerce space, lack of common taxation rules can hinder growth in future. In the online shopping industry, especially, the need of the hour is a uniform goods and services tax (GST) across the
country. Currently, inter-state movements of products often pose a problem, given the different taxation rates. This would need to be resolved in order to extend the reach and improve the e-commerce experience. On the local front, online shopping predominantly remains a practice of urban and middle class consumers. Though consumers in small towns have started using Internet actively, conversion from visitors to shoppers would take some time. Then there is logistical and supply constraint for retailers. While online shopping is expected to find some share in smaller Indian towns too, increasing supply of products and lack of logistics like warehouses can be a challenge for retailers
Porter’s 5 forces Analysis
Threat of new entrants
Since the E-Commerce industry in India is booming, there is a great opportunity for growth in this sector. Thus, a lot of new players enter this market every day. Moreover, since internet is available everywhere, it tends to breakdown any regional barriers. Also, there is not a lot of differentiation that can be created in terms of product quality. This encourages even more players to enter this lucrative market. There are no patents possible as it is an open sector and everyone has easy access to technology
Threat of substitutes
Here, substitutes are possible in all formats as there is always something new coming up in the internet market. Tomorrow, say a buyer wants to order a movie DVD from say Flipkart, if he finds it to be expensive, then he can always order a CD from a nearby store (as these substitutes are growing tremendously). He also has an option of watching the movie online itself as today a lot of websites have instant screening facilities for movies that customers desire. Also, since there is no switching cost involved in changing from one online product to the other, there is no incentive for the customer to stick to the same product.
Bargaining power of suppliers
In general it is low because the kinds of products that this industry caters to are available quite easily. We talk about DVDs, CDs, Books, electronic items etc. a lot of suppliers are available today that are ready to sell them to an e-tailer. However, if we talk about firms like Microsoft, in this case, the supplier side is strong and concentrated and thus patented products like Microsoft office are not easily available. Threat of suppliers integrating forward into the industry is also.
Bargaining power of buyers
It is high because the customers or the buyers have a plethora of options available to buy any product. They can easily switch from one product to the other. Moreover, most customers here are price conscious and thus look for price as their major criteria for selection. Brand loyalty too does not come into picture in the e-commerce industry to a great extent.
Threat of Competitors
This threat is high as there are a large no of firms like EBay, Amazon, Flipkart, FNAC, MSN, Snapdeal etc. in the market that sell a large diversified set of products and there is not much differentiation amongst them. The only way to be able to differentiate is through the service you provide in terms of delivery time, quality of the final product, interaction through blogs and websites, easy user interface, and cost cutting through efficient supply chain management.
