E-commerce business is growing at very fast pace in India , as it
is expected that India will become 3rd largest nation of internet
users by 2014, so E-commerce business is expected to grow to Rs 7000 Crores by
2015 as compare to Rs 2500 Crore in
2013.There are many online players as flipkart.com, myntra.com, fabmart,
indiaplaza.com and many others , doing very good online business. Google study
reveals that 51% of traffic for its online shopping festival is from tier 2 and
tier 3 cities, it reveals that people in India from small cities are also
showing their interest towards online shopping, which is a positive sign for
e-commerce industry.
Flipkart one among the leaders in e-commerce business in India is
growing at very fast pace , on the other side, it is also facing competition
from ebay and jungle.com (an indirect entry of Amazon.com in India). So
flipkart has to gear up with strategies to take on its competitor and specially
amazon.com.
Analysis:
E-commerce business is gaining ground in India. Especially tier- 2
and tier-3 cities people are taking much interest in online shopping as they
don’t have very easy access to top brands, so online shopping is an easy
platform to shop big brands.
Flipkart, one among the top leader in e-commerce business started
its operation in 2007 with selling online books and by 2013 sold merchandise
across 12 product categories.
In India people still afraid of doing online shopping, because they
afraid of online transactions. They don’t want to disclose their credit or
debit cards details. Flipkart analyzed this scenario very prudently and
introduce cash on delivery, means you can put your order online,you don’t need
to pay online at the same time, you can pay money when you get product received
at your home. Others reason behind the flipkart success are timely delivery and
quality. Flipkart has also introduce 30 days cash back guarantee, means if you
are not satisfied with product, or feels some issue with product you can return
the product and whole amount paid will be given back to customer.
If we talk about some statistical data of flipkart, it had a
turnover of 11.6 crores in 2009-10, which increased to 50 crores in 2010-11. A
huge increase occurred in 2011-12, it had 500 crores revenue in this year, 10
times of previous year. Flipkart had 4800 employees in 2012 and served 50,000
orders a day. Its daily sales were about 2.5 crores.
Flipkart is planning to add more categories like fashion apparel
and music CD store.
Online hardwork and online offers fetched success for Flipkart.
This online success has been complemented by offline hard work. One of the
areas for hard work is the supply chain.
Supply chain management is the active management of supply chain
activities to maximize customer value and achieve sustainable competitive
advantage. Flipkart used supply chain management to develop and run supply
chains in the most effective & efficient ways possible. Flipkart had leased
warehouses, so it could meet 80% of order directly from warehouse, which makes
deliveries faster.
Flipkart and other online shopping websites offer free home
delivery, though it is very good strategy, it can attract more customers, but
on the other hand it becomes hurdle for e-commerce business. Inspite of huge
increase in revenue, Gross margin loss is major issues faced by flipkart. Gross
loss is increasing due to delivery cost incurred.
So it is very important for flipkart to raise money for growth, but
it also seems to be very hard as investors are not much interested in investing
money as they see no future growth in this sector.
One of the reason behind increase in sales and revenue is that
flipkart is applying strategies very intelligently. In one of the major
strategic move Flipkart acquired letsbuy.com. It becomes killer combination as
letsbuy.com firm was expertise in selling consumer electronics and
computers, and flipkart known for
superior technology and supply chain management .
They also introduced digital content market with the unveiling of
its digital music store ‘Flyte’.
Flipkart also spent huge amount on advertising and they choose IPL
(Indian premier League) for the launch of their adcampaign and they came up
with new taglines “Shopping ka naya address “
Flipkart is facing a tough competition from other e-commerce
companies like Ebay and jungle.com (indirect entry of amazon.com). Amazon is
leading online retailer in US and it has also become big online retailer in
other foreign countries.
In 2013, Amazon has made direct entry in India, as amazon.in, but
still it is redirecting to other online stores for shopping and people can use
it for comparing price on different stores.
SWOT
analysis of Flipkart
Strength:
·
Cash on delivery(COD) and 30 days cash back
guarantee scheme
·
Free to home delivery
·
Good in supply chain management
·
Own warehouses, so delivery is quite fast
Weakness:
·
Cost of acquiring customer is very high ($15-$18)
·
Delivery cost is incurred by company only
·
Gross loss is increasing
Opportunity:
·
Growth in e-retail sector
·
Tier-2 and Tier-3 cities people are showing
more interest in online shopping
·
Mobile applications development for online
shopping portal
·
More securities for online transactions
provided
Threat:
·
Government policies
·
Increasing competition from international and
national players
·
Investors are not showing interest in investing
money
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