ATII

An Operations Management Perspective

By Group 3 : Aseem Rohatgi -010 Dheer Vora -015 Karanvir Sidana -025 Purbashish Ganguly -046 Siddhi Aggarwal -067 Spreha Kanika -069

E-COMMERCE & E-RETAIL IN INDIA• In 2013, e-commerce market in India estimated at USD 16 billion,

grew at 88% CAGR from 2012, set to grow to USD 56 billion by 2023.

• Currently there are 243 million active internet users.

• In 2006, e-commerce market stood at USD 1.75 billion and there were only 21 million active internet users.

• Flipkart founded in 2007 by two ex-Amazon employees.

• Became a game changer in e-retail, pioneered the COD concept and introduced 30 day return policy.

• Initially an online book store, today it has more than 15 million products across 70 product categories.

• Started with an initial investment of Rs.4 lakhs, present valuation is somewhere between USD 5-7 billion.

E-commerce & E-retail

Flipkart-Overview WarehousingOrder

Processing

Inventory and Supplier

Management

Logistics and SWOT

The Way Forward

COMPANY OVERVIEWProduct & Technology

Business Development

Operations

Website Management

ERP System

Vendor Management

Sales Management

Pricing Strategies

ProcurementWarehouse

Inventory Management

Logistics

Customer Support

Company Structure• Mothership - Flipkart Pvt Limited (FPL), registered in Singapore. FPL owns 3 other

Singapore listed entities : Flipkart Marketplace Ltd (FML). Flipkart Payments Pvt Ltd (FPPL). Flipkart Logistics Ltd (FLL).

• Currently, WS-Retail operating as a vendor on marketplace.• Flipkart currently has 13,000 employees on its payroll.• Ships 50 lakhs shipment every month equivalent to 2 orders per second.• March 2014, hits an annual revenue rate of USD 1 billion in Gross Merchandise Value

(GMV).• Became the first e-commerce company globally to raise USD 1 billion in a single round of

funding.

E-commerce & E-retail

Flipkart-Overview WarehousingOrder

Processing

Inventory and Supplier

Management

Logistics and SWOT

The Way Forward

2007 2009 2010 20102010

Raised $10 MRaised $1 M Acquired WeRead Raised $20 M

2010 2011 2011 2011 20112011 2011

Acquired Chakpak.com

2011 2012

Acquired LetsBuy for $ 20 M

Acquired $ 150 M

2012 2012 2012 2013 2013

Raised $ 160 M Raised $1 billion

20142014

$1 B sales

App

20142013

Acquired Myntra for $ 330 M

ORDER PROCESSING & FULFILMENT PROCESS• Proprietary ERP systems to process orders.• Typical orders starts with customer searching & selecting

across the categories.• Thereby, it takes on an average, 8-10 clicks for placing the

order.• User directed to Payzippy, Flipkart's own payment gateway.• Order downloaded from the web-store (front-end) to Order

Management System (OMS) (back-end).

• If supplier from Marketplace, it is mandatory for him to use eKart for shipping.

• In case large orders guaranteed by a seller, Flipkart’s provides its own packaging.

• Once seller completes 1 month with 30 monthly transaction, it is upgraded to tier-I seller status.

• Payment cycle for tier-1 suppliers is Dispatch Date + 7 Days

• For tier-II sellers it is Dispatch Date + 12 Days

E-commerce & E-retail

Flipkart-Overview WarehousingOrder

Processing

Inventory and Supplier

Management

Logistics and SWOT

The Way Forward

WAREHOUSING• 7 major warehouses across country in Delhi,

Noida, Mumbai, Pune, Chennai, Bangalore & Calcutta.

• 5000 regional distribution centres across tier-I & tier-II cities.

• Major part of USD 1 billion will go in setting-up/leasing of new warehouses in tier-I & tier-II cities.

• Own Warehouse Management System (WMS), which has 3 major segments:

1. Inward Processing.2. Storage Management.3. Outward Processing.

• All scans during inward processing done manually, plans to automate this using robotics.

E-commerce & E-retail

Flipkart-Overview WarehousingOrder

Processing

Inventory and Supplier

Management

Logistics and SWOT

The Way Forward

INVENTORY AND SUPPLIER MANAGEMENT

E-commerce & E-retail

Flipkart-Overview WarehousingOrder

Processing

Inventory and Supplier

Management

Logistics and SWOT

The Way Forward

Holt’s forecasting method• Re-order point• Historic trends –

seasonality not included

• FIFO system discourages obsolete inventory

Procurement• Inventory (75%) : fast

selling • JIT (25%): Expensive items

with unpredictable demand• Procurement Teams-

Central and Regional

Long Tail Concept• Procurement from

vendors• Selling large number

of unique items with relatively small quantities

• Ad-hoc basis

QlikView• Tool to optimize stock

level and reduce costs• Complex Data Analytics• Inventory Utilization

improved by 5%

Marketplace Model•Adopted in Apr’13 due to FDI restraints•Flipkart acts as interface - does not hold inventory•Orders are placed directly on suppliers and delivered by Ekart logistics and other partners

S • Method of supplier selection-Starting out small and scaling up – demand generation

U • Better deals from wholesalers and manufacturers. E.g. MotoG, Xiomi, Book Publisher

P • Grading of suppliers on performance – A,B,C

P • Credit lines and discount terms

L • Quality Check contract

Y • Percentage of returns accepted

LOGISTICS | SWOT ANALYSIS

E-commerce & E-retail

Flipkart-Overview WarehousingOrder

Processing

Inventory and Supplier

Management

Logistics and SWOT

The Way Forward

Shipments per month – 5 million Company’s logistic arm- eKart Logistics and other 3PL Cash On Delivery (COD) ~90% Hub and Spoke model to optimise logistical expenses – 7 mother hubs – Bangalore, Kolkata, Delhi,Noida Chennai, Mumbai,Pune. Delivery time – 3 days(local) to 3 weeks (international) Same Day Delivery introduced in Dec’13 in 10 cities (Rs 140/-)REVERSE LOGISTCS:- 30 day return policy 2.6% returns – logistic costs borne by flipkart Followed by replacement, store credit, actual cash-back

STRENGTHS• Strong Brand value• Own Logistics Arm eKart- reliable• Own Online payment gateway - Payzippy• Own Marketplace model

OPPORTUNITIES• Online fashion and apparel business• Providing logistics services to its competitors.• Growth in online retail sector in India

THREATS• Competitors like Amazon, Snapdeal, Infibeam, Indiaplaza, Homeshop18 etc• FDI in B2C retail• Creative accounting allegations

WEAKNESSES• Investor driven organization - lack of Independent board• Excessive focus on expanding customer base rather than pulling profits

WAREHOUSE

VENDOR

WS RETAIL

NEARBYWAREHOUSE DELIVERY HUB ORDER RECEIVED

BY CUSTOMER

EKART / 3PL

ORDER ORIGINON WEB PORTAL

THE WAY FORWARD

E-commerce & E-retail

Flipkart-Overview WarehousingOrder

Processing

Inventory and Supplier

Management

Logistics and SWOT

The Way Forward

Online Shopping is projected to reach $56 billion by 2023 i.e. 6.5% of total retail market Flipkart will continue to leverage online advantages to • offer equal or better selection range and price than competitors• ensure high quality service through consistent stocking• reliable delivery and responsiveness to customer inquiries• personalization of offerings

Growth will ride on:-• Internet penetration in tier 2 cities and villages• Change in shopping habits of 25-32 age group

Mobile Apps and Website• A more

efficient and use friendly mobile app

• More interactive website

Technological Innovations• Crucial to

stay in the highly competitive market

• e.g. eBay ‘s virtual window shop

Focus on smaller towns• In-sync

with mobile penetrations

• Make brands available in smaller towns and villages

Innovative Logistics• Reinvent

logistics – esp rural distribution

• e.g. Amazon’s patent for Anticipatory Delivery Model

Brand Consolidation• Better

synergies• More

commanding position to suppliers, Govt lobbying

Personalized Catalogue• Further

optimize user profiles through dynamic programming and analytics

• Personalization through AI

THANK YOU