Flipkart

Introduction
Flipkart is an electronic commerce company head quartered in
Bengaluru, India. It was founded in October 2007 by Sachin
Bansal and Binny Bansal (no relation). Flipkart has launched its
own product range under the name "DigiFlip" with products
including tablets, USB flash drives, and laptop bags.As of April
2017, the company was valued at $11.6 billion
Things are easier said than done! To realize our dreams and that
also in such a grand manner is really a tough task. The founders
of Flipkart have probably conquered their dreams with the
amazing success of Flipkart. Flipkart is something which has
really opened up the Indian e-commerce market and that also in a
big way. Flipkart was co-founded by Sachin Bansal and Binny
Bansal in Oct 2007. Both are graduates from IIT-Delhi and have
prior work experience in Amazon.com They both were solid
coders and wanted to open a portal that compared different e-
commerce websites, but there were hardly any such sites in India
and they decided to give birth to their own e-commerce venture -
Flipkart.com Thus was born Flipkart in Oct 2007 with an initial
investment of 4 lac (co-founders savings). It was never going to

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be easy since India has had bad past experiences with e-
commerce trading. It was not an easy segment to break into,
people were very particular in paying money for something which
they had not seen and received. The trust was missing in the
Indian customers. So what Flipkart had to do was to instill trust
and faith in their customers. And they did exactly the same, will
discuss more on how they did so later in the post. Flipkart began
with selling books, since books are easy to procure, target market
which reads books is in abundance, books provide more margin,
are easy to pack and deliver, do not get damaged in transit and
most importantly books are not very expensive, so the amount of
money a customer has to spend to try out one's service for one
time is very minimal. Flipkart sold only books for the first two
years. Flipkart started with the consignment model (procurement
based on demand) i.e. they had ties with 2 distributors in
Bangalore, whenever a customer ordered a book, they used to
personally procure the book from the dealer, pack the book in
their office and then courier the same. In the initial months the
founder's personal cell numbers used to be the customer support
numbers. So, in the start they tried their best to provide good
service, focus on the website - easy to browse and order and
hassle-free, and strove hard to resolve any customer issues. Since
there were not any established players in the market, this allowed
them a lot of space to grow, and they did in fact grew very
rapidly. Flipkart had a revenue of 4 crore in FY 2008 - 2009, 20
crore in FY 2009 - 2010, 75 crore in FY 2010 - 2011, and the
revenue for FY 2011 - 2012 which ends on 31 Mar 2012 is
expected to be 500 crore. This is indeed a massive growth. The
company targets revenues of 5000 crore by 2015. The company
started from 2 employees and now has around 4500 employees.
Flipkart started with consignment model as discussed above,
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since most of the customer issues like delivery delays etc. result
from procurement model, the company started opening its own
warehouses as it started getting more investments. The company
opened its first warehouse in Bangalore and later on opened
warehouses in Delhi, Kolkatta and Mumbai. Today the company
works with more than 500 suppliers. As on date more than 80%
orders of Flipkart are handled via warehouses which help in quick
and efficient service. A humble beginning from books, Flipkart
now has a gamut of products ranging from: Cell phones, laptops,
computers, cameras, games, music, audio players, TV's,
healthcare products, washing machines etc. etc. Still, Flipkart
derives around 50% of its revenue from selling books online.
Flipkart is the Indian market leader in selling books both offline
and online, it enjoys an online share of around 80%. The
electronic items have a large number of players like Naaptol,
Letsbuy, Indiaplaza, Tradus, Infibeam, Yebhi etc. The electronic
market share is distributed among them in different unknown
proportions. India has around 13.5 crore internet users today
where as the number of homes with Cable and Satellite (C&S)
television is 10.5 crore. The expected internet users will reach a
figure of 30 crore by 2014 and C&S homes are expected to be 14
crore by 2014. Thus India has a tremendous internet growth and
with the customers getting accustomed to e-commerce, the future
of e-commerce sector is definitely rosy. An approximated 25 lac
people have transacted online this year, the number is all set to
increase with time. Also to mention most of the Flipkart
customers use internet from PC's/Laptops to order goods. The use
of mobile internet is very less at the moment, but with the advent
of smart phones the use of mobile internet for e-commerce
transactions will soar with time. India has 8 crore mobile net users

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at the moment, the number is expected to swell to 22.5 crore by
2014.
1. Evolution of Flipkart
1.1 History and the Founders
Flipkart, currently the giant, stepped into the e-commerce industry
as a player when the industry was in its nascent stage. Flipkart has
truly been an iconic contributor in making the ecommerce
industry the fastest growing industry in the country. Sachin
Bansal and Binny Bansal, the founders, are alumni of IIT Delhi
and ex-employees of Amazon.com. In 2007, they risked their
career by quitting their jobs at Amazon to launch Flipkart. Indians
are known for their instinctive buying behaviour, and this is what
gave way for ecommerce in India. The very notion that saving
time is more important to people than saving money motivated
the co-founders to start Flipkart. There were people who thought
this idea was insane, but in the dynamic and fast-growing retail
industry in India, it was probably required that ideas be a little
crazy. With a mere investment of Rupees four lakhs, Flipkart
started as an online book store. With wide acceptance from the
people in the country, the company grew bigger and diversified
into products like electronic goods, apparels, e-books and other
home and life style products. Flipkart also stood out because it
was innovative from the very start. It was Flipkart which came up
with the idea of Cash On Delivery (COD) when people were
reluctant to make online payments through payment gateways.
This has now been implemented by all other e-commerce sites in
India. Timely delivery of the product was also considered an
important aspect for the success of any e-commerce site. Flipkart
ensured this by coming up with its own supply chain management

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system. So what has made Flipkart so successful today? To put it
all in a sentence, the quality of service provided, the wide range
of products, and the pre and post sales experience provided, is
what sets Flipkart apart from all of its competitors. Building the
company to where it stands today was indeed a difficult task for
both founders. It was extremely essential to build good
relationships with customers and suppliers. In fact, all their efforts
and thinking-outside-thebox has paid off well because the current
Gross Merchandise Value (GMV) of Flipkart is $4 billion. A
huge target of $8 billion GMV and an additional 100,000 sellers
in the list has been set as a target by the company for the coming
year.
1.2 Funding for the Organization
Just like all other start-ups, there were plenty of challenges the
company had to face. Providing delivery to all terrains including
towns and villages, and ensuring user-friendly payment gateways
for the customers were two major problems for the company. To
overcome these, and to convert every challenge into an
opportunity, Flipkart has planned to raise funding of a minimum
of USD 5 billion by mid-2016 with the help of an Initial Public
Offering, listed on the New York Stock Exchange.
1.3 People Practices at Flipkart,
it was also strongly believed that to satisfy customers, it is very
important that the employees are happy and delighted. Being an
e-commerce site, Flipkart’s main focus is always the customers
and the sellers. But of course, without satisfied employees, it
would be difficult to retain customers since employees become
the face of the company. In order to understand the employees’
needs and how they can be retained, Flipkart came up with a
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wellness program which helped employees become more
productive and work to their fullest potential. It also came up with
a framework called as Benefits Design Principles, which ensured
that the design of all such programs are consistent and they are as
per the culture of Flipkart. Flipkart also faced the issues of
effective communication among the employees, to tackle which,
they used a variety of modes of communication, both offline and
online. They also provided employees with the ease of translating
messages into their local languages, which further ensured
successful implementation of the program.
Monitoring adoption rates has helped Flipkart realize their efforts
in keeping their employees happy. They have also formulated a
Happiness index, being measured at equal intervals, which
verifies the experience of the employees during different phases
of the benefits program. This has been a huge learning
opportunity, as such programs allow employees to talk more
about the company, which in turn adds value to the company.
2. On a High Growth Path
2.1 Business Model
Flipkart started as a book selling website, but later went on to
operate as a complete online retail site. The company started with
an inventory based model, but it was in 2013 that it moved to a
market place model, which is how even Amazon.com operates.
Flipkart charges a commission of 5-10% on every sale through its
site. The commission charged through luxury items such as
electronics is higher than that of generic items. Flipkart has
constantly been trying to reduce the percentage of commission
that it charges to its suppliers, so as to have more number of
suppliers. It has also partnered with brands like Xiaomi who
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spend on such sites as a strategy to promote their products.
Flipkart also charges third party sellers, where, when a customer
searches for some kind of product, the product relevant to that
category or that particular brand will be amongst the first searches
to be shown. This is another way companies promote their
products. A listing fee for the sellers is additional revenue for the
company, along with the convenience fee that is usually to be
paid by the customers, which includes the wrapping up of the
product as a gift or even the fee for faster delivery. Payment
gateways is another way Flipkart earns its revenue. It is usually
the transaction processing charges which will differ based on the
way payment is done. For example, if a payment is made through
debit card and net banking, the charges are found to be lowest
(around 0.75%-1.00% of the transaction amount). Similarly there
is percentage charge levied on even credit cards and American
Express cards too. Thus, depending upon which mode the
customer selects to make the payment, the company gets its
transaction revenue, making it another way to earn penny for the
company.
2.2 Product Portfolio
Flipkart has a wide product portfolio with strategy of expanding it
more. In 2015, Flipkart tied up with three of the country’s largest
home retail brands namely- Home Town belong to the Future
Group, HomeStop by Shoppers Stop and @home. With these tie-
ups, Flipkart plans to introduce a new range of products on its
website, thus expanding its product portfolio. Till 2015, Flipkart
had about 1000 brands in its portfolio, which included seven lakh
home products. These tie-ups, not only gave a push to Flipkart’s
growth, but also made it easier for customers to choose from more
variety, and provided them an opportunity to try some of the
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leading brands in India. Flipkart has also been planning to partner
with a number of retailers across various categories, making the
website a one-stop destination for all kinds of consumers. The
company also believes that aside from the product portfolio, a
combination of the distribution of the products and the latest
technology can help enhance the company’s customer base
further. Flipkart has provided platforms to several brands in all
categories to compete with each other. Through this, it has
attempted to attract more customers. Flipkart has also tied up with
many brands wherein the company promotes the products of such
brands exclusively. Motorola is one such brand where Flipkart
had provided a platform for the launch of Moto-G and Moto-E.
Flipkart also came up with its own personal product range called
as DigiFlip, where it offers products such as gadgets, pen drives,
headphones etc. Flipkart has targeted itself to be number one in
online retailer of furniture. The addition of home furnishing and
automobiles in its product portfolio were some changes that it has
made. By the end of 2016, Flipkart has planned to achieve sales
of around Rupees 2600 crore in the furniture segment alone. Such
a decision can be a milestone strategy for the company, as going
into the furniture segment at this point of time has been predicted
to be a boom, reaping huge revenues for e-commerce companies.
2.3 Web based to App based
Going from a web based model to an app based model can be
decision taken after plenty of brainstorming in any organization.
Every coin has 2 sides. Proceeding with a completely app based
model had both advantages and limitations. Myntra, which was
acquired by Flipkart, had changed its operating model to being
app based alone. It helped Myntra save on marketing costs, as it
required no cost in sending notifications over applications. It has
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also been proved that the app-customers have been more loyal
and profitable towards the company. An app based model also
provided personalization, better user interface, superior customer
experience, the ability to easily connect anytime and anywhere,
rich customer data and so on. After the acquisition, Flipkart
decided on proceeding with web and app based model. In March
2016, Flipkart launched a mobile web application which is very
light and provides complete app-like experience to all its
customers. Flipkart named the app Flipkart Lite. This app was
built to lighter than most phone applications, and did not require a
dedicated storage for the application for customers who did not
want to install it on their phones. As per a market survey
conducted on consumer preference over e-commerce sites, it was
found that 80% of the customers wanted a website for an e-
commerce site, though only 20% of them might use it. This was
when Flipkart realized that only for an app based model was a
very consumer-friendly decision. Further, only app-based would
take away the options that is available to its customers to have a
complete visual experience of buying things online. Flipkart has
also set up “Pick up Stores” in various cities which provide
convenience to the consumers to pick up their orders as per their
convenience. Flipkart has planned to increase the number of
stores all over the country and to also make them fully outfitted
experience zones, where customers can gather the experience of
the product by trying the product, seek alterations, and enjoy the
product demonstrations.
2.4 Acquisitions
Flipkart, being a giant, was never too hesitant in acquiring a
number of smaller companies so as to maintain its market share.
The first of the few bigger companies that it acquired was
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Myntra.com and Letsbuy.com. Such a step was a necessity with
the entry of Amazon in the country. Flipkart also managed to
break the old norm of buying things from retail stores, and by
providing everything online, brought utmost convenience to the
people. Flipkart further grew with few more acquisitions like
WeRead in 2010, which is social book discovery tool. Similarly,
Mime360, which is a digital content platform company, and
Chakpak.com, a Bollywood news site, were both acquired in
2011.
2.5 Promotion
Flipkart has changed the way a company promotes itself. It
largely depends on word-of-mouth promotion, where the satisfied
customers provide feedback and enable other customer purchases.
Flipkart is also on Google Ad-words and SEO, to have a firmer
grip in the online space. Flipkart also connects with its customers
on social media sites such as Twitter wherein they answer all
issues raised by the customers, and also evaluate all the
suggestions given by the customers and implement them With its
first TV advertisement which focused on how books can be
delivered to door steps in just one click, helped raise awareness
about the company to a greater extent. Flipkart has come up with
varieties of themes for advertising their products. Their tag line
“No kidding No worries” signifies the comfort and the
convenience that the company aims to provide to its customers.
Another eye catching tagline “Shopping ka naya address” helped
the company promote itself as a better alternative shopping
experience to its target customers. A number of TVC strategies
used by the companies are targeting big events such as IPL in
2014, kids acting as adults making it easy for customers to recall,
and testimonial based creative campaigns to demystify the fear of
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the online shopping experience. The exclusive phone application
by Flipkart has also been a tool in promoting itself, by giving
latest alerts about the discounts, recent product launches, current
offers, and various coupons and vouchers.
2.8 Flipkart Assured - Taking on Amazon
With Amazon’s Prime, which assures faster delivery of products
and a valid yearly charge, Flipkart introduced Flipkart Assured,
with also guarantees free delivery in few days. This aside,
Flipkart Assured also promises quality products by conducting
quality checks at least 6 times. The supply chain efficiency and
the expertise in technology have made Flipkart Assured a
successful initiative by the company. Being an inclusive offer,
anyone on Flipkart can avail this feature, with no extra
memberships or subscriptions. The feature has been applied on all
the popular categories chosen by the customers, such as mobiles,
electronics, fashion etc.
3. Challenges
Despite all the challenges and difficulties that Flipkart faced as a
start-up company in the early 20s, it was the unflinching belief
and confidence that the company and its founder had, which made
it possible for the company to reach the status of a ten billion
dollar company. There’s a famous quote which states- “The first
step to achieving something is to believe that you can achieve it.”
This, I believe, is how things Flipkart went about ensuring its
success along a rocky, challenging journey. The company’s
logistics ability is probably the primary key or the game changer
which has helped it evolve over time. Starting business as an
online book store was a smart move, as it was a low investment
plan and also had a quicker turnaround time. And of course, the
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rest is history. Flipkart is an inspiration to all the start-ups who
are struggling to achieve their milestones. The Flipkart story truly
and completely proves the saying: “If you have a great idea, and
you are a doer and not a thinker, success is not far off.”
Questions:
1. In spite of having such a successful journey for Flipkart,
what is it that is still hindering to the company that it is not
able to win over its rival Amazon?
2. What will happen to Flipkart in the coming future?
Flipkart’s Success mantra:
 Great customer service Flipkart users are more satisfied than
that of their competitors. Great customer service has been its
hallmark.
 Easy to use website, hassle free payment system The user
interface is sleek and easy to use.
 Cash on delivery/Card on delivery mode of payment This
has been a major instrument in Flipkart’s success. Almost
60% of its sales happen through this mode. Cash on delivery
created trust in the minds of Indian customers who were
always weary of making payments online.
 Focused on user experience Every other e-commerce site,
tried to cram the maximum of amount of information
possible into every single page where as Flipkart focused on
providing only the relevant info.

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Conclusion
Due to fast moving lifestyle, online shopping has been growing
drastically in India. With developed internet penetration,
increasing adoption of devices like smartphones, tablets, and
laptops, and access to the Internet and the shift in buying behavior
among the consumers has contributed to the rapid growth of the
online consumer base. The increase of online shopping has
become a trendy way for consumers to shop over internet. The
research indicates that shift in buying behavior towards online is
positive due to reasons like cash on delivery, discounts, schemes
& quality of products offered. Increasing awareness towards use
of internet, satisfactorily results in online shopping, rise in
standard of living, occupation, influence of friends and attractive
offers had affected purchase decision making. Youth contributes a
considerable proportion of the online users with India’s youth
comprising a significantly larger share than global internet users.
‘Y’ generation which are youths between the age group of 18-35
years were mostly attracted towards online shopping of electronic
product through smart phones. Flipkart as India’s leading e-
retailer has revolutionized online shopping like never before
maintains top position on consumers mind followed by Snapdeal
& Amazon. Flipkart to retain top position it needs to offer better
schemes & offers with superior quality and service. With nearly
one-third of internet users already making purchases online, the e-
retail growth will rely more on increased spending from existing
buyers than first-time online buyers. When it comes to liking
most about online shopping, most of the e-consumers likes
cheaper prices as their primary motivation for shopping electronic
products online and Cash on delivery is the most preferred
payment method. E-consumers decision making mostly

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influenced by marketing influences like the Price, Advertisements
on TV, Newspapers & Magazines, Free samples, Quality of
product & Brand Image impacts most on consumers’ willingness
to buy online. Overall, most of econsumers reported to have
satisfied experience with the quality and services offered to them
by e-retailers. Hence the study directs the e-retailers that they
should focus on these important aspects in order to attract the
more customers towards online shopping
References
1. Kalyan Krishnamurthy to be Flipkart's new CEO; Sachin
Bansal to remain group chairman". Economic Times. 10
January 2017.
2. Motorola launches Moto G smartphone in exclusive tie-up
with Flipkart". Economic Times. 6 February 2014
3. "Flipkart raises $160 mn in latest funding drive".
Moneycontrol.com. Retrieved 18 February 2015.
4. www.ETRetail.com. "Action against Snapdeal, Amazon,
Flipkart for selling medicines without licence.
ET Retail". ETRetail.com. Retrieved 28 February 2016.

Thank You
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