CASE STUDY ON FLIPKART.COM & ITS E- BUSINESS.

IN SUPERVISON OF MS. PRAGATI SAXENA

SUBMITTED TO: MS. PRAGATI SAXENA

SUBMITTED BY: POONAM R. DUBEY MBA-MM (III Sem) ER.NO: A2021310033

ACKNOWLEDGEMENT

I would like to express my immense gratitude to PROFESSOR MS. PRAGATI SAXENA , who gave me the golden opportunity to do this wonderful case study on the FLIPKART.COM & ITS E- BUSINESS which also helped me in doing a lot of Research due to which I came to know about so many new things. I am sure this is going to help me out for my rest of life. I will be also thanks her for her constant and spontaneous support, efficient care and constructive recommendations and suggestions regarding the outlines of this case study and correcting my doubts. I shall remain ever grateful to her for her kind gesture and cordial guidance in completing the project.

TABLE OF CONTENT Sr. No Topic INTRODUCTION OF E- COMMERCE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

INDUSTRY OVERVIEW TOP INTERNET RETAILING SITES IN TERMS OF UNIQUE VISITORS BACKGROUND OF FLIPKART.COM OBJECTIVE OF FLIPKART PROFILE OF THE FOUNDER OF FLIPKART.COM HISTORY OF FLIPKART.COM SWOT ANALYSIS OF FLIPKART FUNDING SOURCES OF FLIPKART COMPETITORS AND THE COMPARATIVE ANALYSIS OF THEM WITH FILPKART: FEATURES OF FLIPKART.COM MARKETING STRATEGIES & BUSINESS MODEL ACQUISITION OF WEREAD BUSINESS RESULT TILL DATE

Page No 4 4 4 5 5 6 7 8 9 10 10 11 12 12 13 13

CHALLENGES FACED WHILE LAUNCH FUTURE PLAN

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FINDING & CONCLUSION

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FINDING & CONCLUSION

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INTRODUCTION OF E- COMMERCE
Before going into detail case study of Flipkart.com and their E-business strategy, let us understand in brief about what is E-commerce and its scenario in India. E-commerce (electronic commerce or EC) is the buying and selling of goods and services on the Internet, especially the World Wide Web. India has an internet user base of over 50 million users. The penetration of e-commerce is low compared to markets like the US and the UK but is growing at a much faster rate with a large number of new entrants. Indias e-commerce market was worth about $2.5 billion in 2009. About 75% of this is travel related (airline tickets, railway tickets, hotel bookings, online mobile recharge etc.). Online Retailing comprises about 12.5% ($300 Million as of 2009). India has close to 10 million online shoppers and is growing at an estimated 30% CAGR vis--vis a global growth rate of 8-10%.

INDUSTRY OVERVIEW
The World Wide Web might have been built to support geek-speak, but today it is used to transmit information anyone can understand. Aside from possibly E-mail and instant messaging, accessing online content is the main reason most people use the Internet today. It is estimated that a billion people around the world have some kind of Internet access, either at work or at home, and most are going online to read the news, to get product information or for multimedia entertainment. Some of the largest content providers are Yahoo, MSN, and America Online. Some other traditional media companies like Walt Disney Internet Group operate some of the top destinations on the Web, such as ESPN.com and ABC News. With Internet access continuing to grow and advertising rates stabilizing, online content is developing and expanding on several fronts. One of the most exciting areas of development is streaming audio and video content, which has become increasingly popular with the rising use of broadband Internet connections. While sites run by online and traditional media companies will most likely continue to command the lion's share of audience and advertising revenue, there are some grass roots efforts that are beginning to challenge that dominance, chart is excluded Flipkart.

TOP INTERNET RETAILING SITES IN TERMS OF UNIQUE VISITORS (SOURCE: MEDIA MATRIX)

BACKGROUND OF FLIPKART.COM FlipKart , a Bangalore-based online retail bookstore has been repeatedly referred to as Indias answer to Amazon. Having chalked up a registered user base of more than 1 million across the country in less than four years since its inception, Flipkart is considered a pioneer in the field of e-commerce. Started in 2007 by former classmates at IIT Delhi and later colleagues at Amazon.com, Sachin Bansal and Binny Bansal, the company is fast gaining dominance in product categories like music, video, games, computers, electronics, mobile phones, healthcare and personal product categories. Flipkart is also the largest online book store in India, with over 11.5 million book titles available Currently, Flipkart has registered sales of nearly 2.5 million items across all categories and sells more than 20,000 units per day or 14 items per minute. 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%. Backed by a significant funding of $31 million, 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 13 cities and is set to expand this to 25 cities by next year. With a team of around 2500 members, the company operates from offices in Bangalore, Mumbai, Delhi, Chennai and Kolkata.

OBJECTIVE OF FLIPKART: Flipkart went live in 2007 with the objective of making books easily available to anyone who had internet access. Today, apart from book selling they are present across various categories including movies, music, games, mobiles, cameras, computers, healthcare and personal products, home appliances and electronics.

PROFILE OF THE FOUNDER OF FLIPKART.COM

Sachin bansal, CEO and cofounder, Flipkart

Sachin spent his early years in Chandigarh. He graduated from IITDelhi with a degree in Computer Engineering. In 2006 he joined Amazon.com in India which he later left to set-up Flipkart. As CEO, Sachin oversees all the customer facing activities of the company ranging from technology to marketing. He is also in charge of Flipkarts corporate divisions which include the finance and legal departments. An avid gaming enthusiast, Sachin likes to spend most of his free time with his family.

Binny Bansal, COO and Cofounder, Flipkart: Born and

raised in Chandigarh, Binny went on to get a degree in Computer Engineering from IIT Delhi. He had a brief stint at Amazon before taking the entrepreneurial plunge with Flipkart. At Flipkart, Binny oversees all operational activities that come into play from the time the customer places an order till the time of delivery. This spans across divisions like warehousing, logistics and customer support. A big fan of Salman Rushdie as well as Stieg Larssons Millennium series, Binny is also passionate about soccer and NBA. An active sportsman, he used to captain his school basketball and soccer teams.

HISTORY OF FLIPKART.COM
Before incorporation of Flipkart.com both the Bansals have worked for Amazon in the past. Sachin joined Amazon in January 2006, followed by Bansal in January 2007. Both quit in September 2007. While at Amazon, they realized they should do something on their own since the scope for e-commerce was huge they thought of business like Flipkart. Flipkart.com was founded on 5th Sept 2007. The website was launched on 15th Oct 2007.with initial capital investment of Rs2.5 lakh each Sachin & Binny Bansal and started with seed money of Rs5 lakh. It took us about a month and a half to start a basic working website with 50,000 titles. Weve now grown our catalog to over 1 Lakh available titles. They began working from a two-bedroom apartment in Koramangala. One of the rooms was converted into an office. They tied up with all the distributors of major Indian publishers in Bangalore. Every day, one of them would go on a bike and buy books to make their own catalogue. They would sit down on the floor and make the packages to give to the courier agencies for shipment. This went on for three months, with just two people running the whole show. Flipkart, headquartered in Bangalore, by now they had around 120 employees. Initially, few distributors or publishers took them seriously. They needed to build a slick website that was fast, and where the discovery of the product was easy. Also, the payment delivery systems had to be easy and smooth. So some where it has been the key to the companys sudden rise, from a turnover of a few lakhs in the first year (2007-08) to Rs2.5 crore the next (2008-09), Rs25 crore in 2009-10 and Rs75 crore now (2010-11). An important change took place around 2010 the payment mechanism. Its a feature of Flipkarts model that is distinct from Amazons. For business model they also took reference from Chinese companieswhere e-commerce is hugedid retail online. The US has an established credit card culture, while China (like India) is a cash-based economy with lesser credit card penetration. So looking at e-commerce models in China, they put in place a cash-on-delivery system. Today more than 50% of their orders operate on a cash-on-delivery basis. Most importantly, on nearly each book a consumer buys through Flipkart, the price is 5-35% cheaper than the cover price. According to Bansal Flipkart has transported books to nearly every pin code in India, and definitely every pin code in Kerala, 50% of their orders come from the metros: Mumbai, Bangalore, Delhi, Chennai, Kolkata and Hyderabad. The remaining buyers are from other parts of the country. Each day, Flipkart ships 1,000-odd items through the government book post as so many villages dont have courier facilities. According to Bansal, the most saleable categories are fiction, trade paperbacks and Indian writers. More than 60% of Flipkarts customers are working males between the ages of 25 and 35.

SWOT ANALYSIS OF FLIPKART

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STRENGTH
Strong brand name including unique pricing policy with discount Product diversification from books and CD/DVD markets has provided additional customers in other product areas and indicates strategic movement to grow the business through new customer bases. High quality management team. Efficient customer service support. Strong Infrastructure with effective automated distribution centers. Developed and upgraded technology including software and hardware Two segments: B2C and B2B e-commerce. Functions such as the User Reviews are seen as a positive attribute to share information and feedback which can help to stimulate sales.

WEAKNESS
Risk of introduction of wrong new categories which could damage companys brand Companys offered free shipping might affect future financial outcome Certain products (high volume/weight) have high shipping costs which could confront with local offline retailers The focus on technology is important for on-line facilities as the use of technology is needed for all aspects of interface with the consumer. These systems require constant maintenance to ensure the customer receives the level of service the brand is expected to provide. They are dependent on external delivery companies to carry out the delivery function of the interface with the customer which can lead to uncontrollable service level problems and potential cost increases in line with the wider transportation industry such as rising fuel and increased vehicle taxation. If these costs are not absorbed they are passed back to the consumer both with potential negative effects.

OPPORTUNITIES
Construction of an extensive community of buyers. Positive changes in the business model of the book market. E-commerce expansion in and growth of internet users in the next five years, predominantly in the market. Flipkart have the opportunity to develop specialist relationships with publishers to offer exclusive editions and launch new authors as part of exclusive rights which will provide a point of difference within the market place and generate stimulated growth through followers of specific artists. Investment in fulfillment will provide an increases level of actual customer service meeting consumer expectations. Consumer expectations are relied upon by Flipkart.com to ensure repeat business and longevity.
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A membership facility has been introduced to offer customers prime delivery slots during key seasonal times and member benefits can lead to providing a differential within customer service expectations around seasonal times which may lead to the growth in sales through this facility. Provide catalogues for the books available and partner with a library (public sector) that will also cover rare books collection. It has the opportunity to partner with many e-commerce retailing organizations. It can invest on making more systematic approaches towards making the customer more loyal towards the products provided by it.

THREATS
Growing on-line facilities from high street brands with provisionally better economies of scale suggest flipkart may not be able to compete on line for like service and product price. Thus with no specific differential to the competition there is the potential customer sales will migrate. Increasing transportation costs will directly impact delivery charges to customers - as these costs are not absorbed into the direct business but paid to a third party it is assumed these will be directly passed onto the consumer which can have a negative impact to brand perception from the consumer viewpoint. General economic conditions will drive retail prices down and customer expectations for promotional deals will become a focus for all product areas - with smaller economies of scale overall within the marketplace the buying power may not be sufficient to carry such offers. Any internet business gains popularity quickly also gains competitors in a vast amount that is hard to control and due to the same level of service is provided by the other firm it is very much diffult to differentiate. Upon expansion, the firm should specially consider the culture of the country or region that it intends to differentiate.

Competitors like Amazon, eBay, Barnes & Nobles, and Wal-Mart Population segment not targeted to on-line sales due to their lack of internet access Competition will increase due to the low barriers to entry in the market: offline companies are coming online

FUNDING SOURCES OF FLIPKART

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Initially funded by the Bansals themselves with 5 Lakh, Flipkart has since then raised two rounds of funding from venture capital funds Accel India (in 2009) and Tiger Global Management (up to the tune of US$10 million) in 2010. The company is currently growing by nearly 25 per cent a month and has projected revenues of over Rs 25 crore for the fiscal 2009-10.

COMPETITORS AND THE COMPARATIVE ANALYSIS OF THEM WITH FILPKART:

Some of the other companies that are doing well in the online books market for India are Amazon, Pustak, IndiaPlaza, Landmark, FirstandSecond, Strands and InfiBeam are close competitors of Flipkart. The online stores score over physical stores in terms of the number of titles they can stock and in convenience. The following figure shows the comparative analysis of the page views on some of the above sites in the last three months (courtesy: alexa). The chart shows Flipkart and Infibeam as close competitors for the top slot in the online book market. It would be good to have the next post on Infibeam and find what they are doing right.

FEATURES OF FLIPKART.COM

Combines an intuitive user interface with excellent customer service. Competitive prices. Vast variety of titles. A free and efficient delivery system. The entire site is accessible using a single search bar. Other than above it also has sections like Top Authors and Recently Sold on Flipkart put the available intelligence to good use. Flipkart has built an advantage over its competitors based on its SEO. Flipkart can be found on 130 keyword searches on search engines. However, the factor that sets Flipkart apart is its reliable, fast and free of cost delivery. Here are a few customer reviews that we came across.

MARKETING STRATEGIES & BUSINESS MODEL

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Initially they used word of mouth marketing and social networking websites like Facebook and Twitter to popularise their company. A few months later, the company sold its first book on flipkart.com - John Woods' Leaving Microsoft to Change the World. Within two years through word of mouth of their services, Flipkart became one of the top 100 Indian sites Advertising is also as one of the tool of marketing and creating awareness amongst target audience, So they started advertising with basic aim to address the apprehensions of online purchase of physical goods. The concept of using kids came about because kids are so trusting. The implied message, you can shop on flipkart.com as trustingly as a child because they have secure payment gateways, great bargains as well as cash on delivery and 30 day replacement guarantee amongst others. The campaign targets 25 to 35 year old working professionals, with internet access. This campaign will be extended to print, OOH and radio. The reach of the campaign has been limited to metros and regions with high penetration of e-commerce.

Brand Update is another aspect of enhancement of image therefore Flipkart is going for Rebranding. Another reason of rebranding is Flipkart is going to launch more products in the consumer electronics space and the current rebranding is aimed at that.

Flipkart made its major change in the business model in 2010 when it included movies and mobiles in its offerings. The brand shed its image of a bookstore and moved into an online store. Now in the beginning of 2011, the brand has made significant change in the logo and other brand elements such

as color scheme and website design. The new logo now carries the brand name and an emblem too. Simplicity and minimalism which was the trademark of Flipkart logo has been compromised for this rebranding exercise.

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ACQUISITION OF WEREAD

In December 2010, Flipkart acquired WeRead, a social book discovery tool from Lulu, a US-based ondemand publishing firm. 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.

BUSINESS RESULT TILL DATE

Sr. No 1 2 3 2008-2009 2009-10 2010-11

Growth Years

Amount of Grwoth 4 crore 20 crore 75 crore

2008-09, 4

2009-10, 20

2010-11, 75

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CHALLENGES FACED WHILE LAUNCH

One major challenge was to get tie-ups with the major book vendors as they didnt have an offline book store. They have somehow managed to persuade them and now most of the vendors are supporting them. The second major challenge was to get the approval for the credit card payment gateway. They didnt want to use CCAvenue as their interface is really confusing. So they had to convince Axis Bank for the payment gateway and that wasnt easy given the fact that they are a self-funded startup and we dont have an offline presence. The biggest challenge currently is reaching out to a larger set of people with minimum budget. Scaling the back-end operations will be a challenge too. They do plan to get angel/seed funding in the next three months to scale our operations.

FUTURE PLAN
Online distribution model would be one of the future plan of the Flipkart.com Upcoming features lined up for the future which would help person in selecting books based on their interests. More acquisition with same type business. As they believe that e-books are advantageous. But it is also important for e- business that in which economies we speak of. In growth terms, India will be behind the West by four-five years when it comes to e-books. The projection for the US is that 50% of books will be e-books by 2015. In India, it will be by 2018 or 2020, not before that.The demand for the normal paperback or hardcover is still high in India.The e-format will dominate in India too. Because market size for online book shopping in India is expected to be between Rs. 20-25 crore for 2007-2008. Market size of whole of book industry in India is estimated at 4000 crores and is growing at a very quick pace. So Flipkart has bright future.

FINDING & CONCLUSION

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After having detail study of Flipkart.com & with following findings, we can conclude that why is the Flipkart is so popular amongst audience?. Flipkart.com aims mostly at people who would like to buy books online in India. What the company calls the steroids for its website are low prices, free shipping and an intuitive interface that makes it very convenient to search for books. The site has a young and trendy look and feel. Flipkart.com was launched by a passionate group of professionals who aimed at giving Indians a good online shopping experience and excellent customer service. Flipkart.coms USP is simplicity, convenience and customer service. They have made searching and browsing for books as simple as possible. And there are a lot of features lined up for the future which would help person in selecting books based on their interests. One of their major goals is to maintain very high standards for customer support. The lack of customer service is one of the major reasons for the slow E-commerce growth in India. They want to change this perception and get people to embrace E-commerce due to the many benefits it provides. At the end we can say that Flipkart is so popular because of good service and unique features the most important feature for any website is Search and this is one of the reasons why Flipkart is so successful in comparison with other book sellers. Flipkart also scores above all the other websites with easily noticeable links like Add to Cart and a single click to the check-out page. Also, Flipkart integrated Google Books preview which facilitates you to read a few pages from the book. So the only lacking part of flipkart which I came across after having personal interaction with people who used the service, they are lacking in distribution channel . They provide good service within specified time limit but due to poor distribution channel some time they deliver book to customer in loss. It means that their transportation cost is more than their book price. So they should increase their distribution channel to increase their profit and to do business with cost efficiency.

REFERENCE
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Personal interview with regular user of Flipkart.com .Example Mr. Kalyan sir from Amity. http://www.penn-olson.com/2011/08/19/techsparks-entrepreneur-problems/ http://vvkchandra.com/2008/01/07/startup-interview-flipkart-founder-binny-bansal/ http://www.flipkart.com/ http://blog.flipkart.com/ http://en.wikipedia.org/wiki/Flipkart http://shiva19892006.wordpress.com/2011/02/22/flipkart-com-case-study/ http://www.startupdunia.com/interview/interview-with-flipkart-founder-binny-bansal-776 http://www.linkedin.com/companies/321062/Flipkart.com http://www.flipkart.com/help.php?topic=about http://vvkchandra.com/2008/01/07/startup-interview-flipkart-founder-binny-bansal/

Note: Kindly note that the research methodology is used for this case study is
all based on secondary data available on Internet.

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