THE ROAD AHEAD FOR

Ajit Braganza - 2014A04Radhika Khanna - 2014B61Rahul Singh Baghel - 2014C01Vani Saksena - 2014C19Anirudh Rangarajan - 2014C41

Background of Flipkart• Flipkart is an e-commerce company founded in 2007 by Sachin Bansal and Binny

Bansal. It is a Singaporean company which operates in India, where it is headquartered in Bangalore, Karnataka. Flipkart has launched its own product range under the name "DigiFlip" with products including tablets, USBs, and laptop bags.– In May 2014, Flipkart received $210 million from DST Global– In July 2014 it raised $1 billion led by existing investors Tiger Global and

South Africa's media group Naspers. Flipkart's last fundraising round in May 2015 had pegged its valuation at $15 billion

• After a recent round of funding, amounting to USD 700 million from existing and new investors Flipkart’s valuation skyrocketed to USD 15 billion

• Reports suggest Flipkart’s plans to raise Rs 1,300 crore through rights issue with its parent company and might also borrow around Rs 400 crore from Kotak Mahindra Bank

• Flipkart have spent their funds on building a strong logistics and supply chain infrastructure• In addition, a substantial amount has been spent on customer acquisition in the form of discounted merchandise, which may

have actually gone a long way in drawing customers to ecommerce sites, resulting in heavy cash outflows• So they will use these to invest in companies that would enhance their services and offerings, thus aiding in faster growth and

customer acquisition

Customer Acquisition• Delivery tie-up with DabbawalasImproving the existing delivery system

• Setting up of PCs within stores so that people from tier II/III can buy products onlineFlipkart Stores /Kiosks in rural India

• Wherein supplier can send their products to Flipkart, then it takes care of delivery, payment, customer service etc.Use Amazon Fulfilled model

• To deliver products to currently non-accessible pin-codes to Flipkart.Collaboration with India Post

• Through Customer Referrals, product reviews/testimonials and repeat product purchases, customers to get reward points which could be used to purchase their next item.

Loyalty cards for customers to earn reward points

• Entering into grocery delivery service and expanding their portfolio by acquiring businesses like Grofers

Acquiring Grocery delivery service providers

• Venture into international markets of developing countries in Asia by acquiring ecommerce businesses such as Bdhaat (Bangladesh), Daraz.pk (Pakistan) etc.

Entering International Market (Developing Asian countries)

• Flipkart can acquire businesses like OLX, Quickr etc., creating a new vertical and adding to Flipkart’s philosophy of growth over profit

Venturing into reseller market through acquisitions

Increasing gross & operating margin of Flipkart

Started with selling books and later moved to providing other products

Not been able to differentiate much after that which has also led other e-retailers to rise in the market

Offering products that have low-mid range margin attracts huge competition – a reality in Flipkart’s case.

Increasing operating margin as acting as an aggregator does not require warehousing cost and buying cost. The only cost associated is the supply cost. For which the e-retailer can charge delivery cost to the customer. Hence, no cost bearing by the libraries.

There are many ways that Flipkart could increase its gross and operating margin

• Levying a penalty charge to supplier for non-delivery/cancellation • Passing 50% share on discounts to suppliers

• To increase gross margin• Storing only fast moving and low priced products

• By conducting ABC and XYZ analysis• to reduce storage • High priced fast moving products can be cross-docked

• Tying up with hpermarket chains:• to reduce storage cost, to increase penetration in tier II and III cities, for faster

deliveries

Most ecommerce businesses operate with a gross margin of 20 to 50 percent

Value Proposition• Flipkart aims to become the largest E-retailer of India• Flipkart have designed it to be a service business, with the sole aim to improve the shopping

experience

How has Flipkart created Value?Very good product and service

quality contributing to maximum amount of credibility in the market.

Customers have always got fascinated by Offers/Discount and Flipkart knowing this have given

better discounts

Free shipping – available for certain products and certain

area codes

Satisfaction of the retailers which linked up with Flipkart also plays a very significant role in maintaining

the brand value

First mover benefit – began with strategically efficient product

categories like books and electronics

Ease of use – simple and user friendly interface and ease of

transactions.

Successful Word of Mouth marketing

Communicate the Value

Setting up of Stores/ kiosks in rural India will help build an image in these regions as well as encourage more online purchases

Fastest Delivery: Ensuring that there are no late deliveries by promoting the value in Metro Stations

Improve Reach to rural areas: Flipkart needs to showcase that they can deliver in rural areas and to remotest places by advertising in regional newspapers

Open display centres in cities to develop more trust in customers about the brands and quality being offered

Open collection centres in the display centres so that returning the product and getting refunds becomes easier for the customers