ASSIGNMENT-1

 Flipkart is one of India’s biggest startup success

stories
 The company has over 160 Mn users and 150 Mn
products across 80+ categories
 Flipkart charges commissions from sellers and also
sells under its private labels
In 2007, two IIT Delhi grads and ex-Amazon employees — Sachin Bansal
and Binny Bansal — got together to launch Flipkart as an online bookstore
— the first of its ilk in India. Who knew then that it would go on to become
India’s most valuable ecommerce business and be acquired by Walmart in
a whopping $16 Bn deal.

QUESTION 1: EXPLAIN BUSINESS PROCESS OF FLIPKART?

The Business Process Of Flipkart

Flipkart, which has redefined shopping in India, works on a B2C (business
to consumer model). Flipkart started off with a direct-to-consumer model
selling books and some other products, before turning to a marketplace
model which connect sellers and buyers and expanding its catalogue. Today,
it sells everything from smartphones to clothes to furniture refrigerators to
FMCG goods — and yes, books too.

Flipkart claims to have lakhs of sellers on board from across India who list
their products in over 80 categories. The average consumer might not care
who the seller is and has a relationship with Flipkart, whereas the seller who
may not have reached the customer at all can now do so thanks to Flipkart’s
platform. To facilitate this transaction and fulfil the order, Flipkart charges a
varying percentage as a commission fee from the seller.

Flipkart Revenue And Losses

Flipkart earned INR 30,164 Cr in revenue for FY18. The company also
multiplied its losses fivefold reaching INR 46,895 Cr.

The major expense which increased the losses for the year ending March
2018 was finance costs, mostly under “fair value loss on derivative financial
instruments”, which increased nearly tenfold to INR 40,937 Cr in FY18 from
INR 4,309 Cr in FY17.

Flipkart has also recently introduced private labels such as MarQ and
SmartBuy, which sell products in various categories. One of the biggest
contributors to Flipkart’s annual revenue is the customer footfall and activity
during its big sales with huge discounts around festivals such as The Big
Billion Day.

In recent months, this discounting has come under the government scanner
and this could impact the company’s revenue in the long-term.
Here’s a look at the investments made by Flipkart Group in the India
business over FY 2018-19:

 March 2018: INR 4,472 Cr ($686 Mn)

 September 2018: INR 3,463 Cr ($486 Mn)
 December 2018: INR 2,190 Cr ($307.5 Mn)
 January 2019: INR 1,431 Cr ($200.8 Mn)

Other Sources Of Income For Flipkart

 Seller Commission: Flipkart charges a commission from the sellers
since it provides a platform for sale for them
 Convenience Charge: Flipkart charges a convenience fee to the
buyers for faster delivery
 Logistics: E-Kart is Flipkart’s logistics company and facilitates the
fulfillment of orders from sellers to buyers through its logistics arm. It
charges a fee from the sellers for the same. There is no standard
charge levied as it changes according to the geography
 Advertisement: Flipkart sells advertising space to companies on its
website. This offers a leverage to the companies buying the
advertising space as they are presented first to the millions of
customers visiting the Flipkart website daily
 Media Buying: Flipkart releases ads for certain brands in the popular
newspapers, radios, televisions, etc, In doing so, Flipkart charges a
sum from the brands that it advertises for.

Flipkart Goes Beyond Ecommerce

In 2016, Flipkart acquired a fintech company called FxMart and released a
payments service called PhonePe. PhonePe offers a UPI-based payments
app as well as support for billing, recharges, ecommerce and other online
services. As per the UPI data released for August 2019, PhonePe was the
leading app for UPI payments in India.

Post the acquisitions by Walmart last year, Flipkar has increasingly turned to
hybrid or omnichannel sales model. It recently opened a FurniSure
experience store to help customers touch and feel the furniture products
before making the purchase.

Besides ecommerce, Flipkart has recently acquired a food retail license,

which it will use to run its fresh, locally-produced food retail business under
the name FarmerMart. It’s also selling groceries online through Flipkart
SuperMart in some cities.
 QUESTION 2: EXPLAIN SUUPLY CHAIN MANAGEMENT OF FLIPKART?

Flipkart is an electronic commerce company and among India’s largest

online retailers with reported sales of $12.5million. Flipkart initially started
with selling books online but has diversified today into a generic e-commerce
website, selling CDs/DVDs, mobile phones and electronics. The mission of
the organization is to provide a memorable online shopping experience to
the customers so that they come back again and they use innovative
services like 30 day replacement, Cash on Delivery, free shipping, EMI
options mainly for electronics and on-time delivery.

Company Structure:

The operations team deals with Supply chain management; from

procurement to warehouse management and customer support.

Supplier Network:
Flipkart has a network of 500 plus distributors and only stocks frequently
ordered items. Items with low demand elasticity, fast selling items which have
a long shelf life are maintained in inventory. Whereas items with low and
unpredictable demand are procured once the customers places the order.

Warehouse Management:
Flipkart has & major warehouse spread across the Metros like Mumbai,
Delhi, Kolkata and Chennai and in the cities of Pune, Bangalore and Noida.
They further have smaller regional distribution centers at over 500 locations.
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.
Flipkart’s warehouse management has 3 major steps:
 Inward Processing
 Storage Management
 Outward Processing
.
Order Fulfillment Process:
Customer orders are filled via Inventory Management ot Just in time delivery
depending on the availability of products
Inventory Management:
Flipkart uses a Continuous review model. The inventory stocks are
replenished when the inventory levels reach Reorder point (ROP). The
company employs first in first out(FIFO) method for its inventory
management. Under the FIFO method, shipment request is sent to a
particular warehouse where the oldest inventory items are shipped first. This
model makes sense for electronics since technology becomes obsolete very
quickly.
Flipkart uses sales to predict the levels of inventory. The warehouses are
divided into multiple parts such as inventory, packaging, shipping etc. Stocks
are replenished every 24-48 hours and in the back end the company records
details of all the transactions. The company has partnered with postal
companies for order tracking and reconcilation, Thus the customer is
updated about the state of his order via email, website or text messages. If
the product needs to be returned, it is done effectively and efficiently due to
the companies partnership with the courier companies. In the case of
electronics, warranty and after sales service is solely the manufacturer’s
responsibility but Flipkart facilitates interaction between supplier and
customer.

With increased penetration of internet services, the e-commerce business in

India is forecasted to increase from 11 million customers to 30 million by
2015. Seeing the prospects for growth, several new companies are going to
enter the e-commerce market and a price war is unavoidable. Thus in order
to stay profitable in this growing competition, companies will have to focus
dramatically on reducing their costs and this can be achieved by maintaining
an efficient backend- nationwide delivery network, warehouses, inventory
management, logistics etc. and thus the importance of managing one’s
supply chain should not be undermined.