e-Tailing

INTRODUCTION
Electronic retailing, most commonly known as E-tailing, is nothing but shopping through the Internet and other media forms. E-tailing is retailing conducted online, over the internet. E-tailing is synonymous with business-to-consumer (B2C) transactions. E-retailing comes under e-commerce. E-tailing helps retailers to build loyal customers and is aimed at selling in areas where they do not have a physical presence. E-commerce and E-tailing, from a business perspective, offer an opportunity to cater to consumers across geographies, with no operational timings, unlimited shelf space - and all this with miniscule quantity of infrastructure. Most growth drivers are in India's favour - demographics, economy, changing lifestyle, exposure to new ideas. There is no doubt that India is moving towards broadband, and is experiencing strong growth in Web-based sales.The increase in the PC and internet penetration along with the growing preference of Indian consumers to shop online has given a tremendous boost to etailing - the online version of retail shopping. An estimated 10 per cent of the total ecommerce market is accounted by e-tailing. With the progress made on e-commerce, various corporations selling different products and services considered setting up e-stores on the Internet to bring more customers closer to them. In fact, there has been a continuous rise in the number of people accessing the Internet.

e-Tailing RESEARCH PROBLEM

Recently e-tailing in India has come a long way. Booming markets have witnessed several websites selling a host of products and merchandise over the net. In fact, there has been a continuous rise in the number of people accessing the internet. According to online research and advisory firm Juxt Consult's 'India Online 2008', there are over 49 million internet users in India. E-tailing accounts for about 10% of the total e-commerce market. With today's net-savvy Indians making online purchase like never before, both the number and variety of products sold online has grown exponentially. We have seen a tremendous surge in consumer interest in online shopping over the last three-four years. With Internet usage growing, consumers have got used to the online interface and technology growth has made online shopping more convenient. At the same time, some established offline retailers have expanded their reach to the online mode, which has resulted in the options available for brand conscious consumers multiplying. Consumer confidence and convenience has been the greatest fillip for this sector. Consumer confidence to shop online has been growing rapidly; this is backed by the satisfactory experience of transacting online. Besides the convenience and better deals, the positive experience of buying tickets and paying bills online have also helped in increasing consumer confidence.

BRAND POSITIONING
The place the product occupies in the consumer mind relative to competing products. Three steps in positioning : 1. Identifying a set of possible competitive advantaged on which to build a position. 2. Choosing the right competitive advantage. 3. Selecting an overall positioning strategy.

e-Tailing

eTailing market in India

The total market size of B2C and C2C E-Commerce industry in India was around Rs. 7080 crores at the end of 2006-07. It rose to Rs. 9210 crores by the end of 2007-08. Within ECommerce industry, the size of eTailing Market for the year 2006-07 was computed to be Rs. 850 crores. eTailing contributed around 12% to the total E-Commerce Market size in the year 2006-07 and in the year 2007-2008. The electronic retail growth of Indian market as estimated by Euro-monitor report stands close to 48% CAGR and in value term it is going to touch INR 27 billion(Rs 2700 crores) by 2010 from INR 4 billion in 2005. The report also predicts that the contribution of internet retailing to non-store retailing is likely to be 46% by 2010. The product offer, or sales proposition, is how the product or service is described and promoted to the customer. The product offer is generally presented in varying levels of detail and depth, depending on the situation. As an opening or initial proposition the words are used by the sales person to attract attention and interest in verbal and written introductions to prospects - so it has to be concise and quick - remember that attention needs to be grabbed in less than five seconds. The product offer is also used by the selling company in its various advertising and promotional material aimed at the target market. Traditionally the selling company's marketing department would formulate the product offer, but nowadays the sales person greatly improves his selling effectiveness if he able to refine and adapt the product offer for targeted sectors and individual major prospects. Developing and tailoring a product offer, or proposition, is a vital part of the selling process, and the approach to this has changed over the years.

e-Tailing FABs (features - advantages - benefits)

The technique of linking features, advantages, and benefits (FABs) was developed in the 1960s and it remains an important basic concept for successful selling and sales training. FABs were traditionally identified and by the company and handed by the training department to the sales people, who rarely thought much about developing them. Here is the principle of using Features, Advantages, Benefits: Customers don't buy features, they don't even buy the advantages - what they buy is what the product's features and advantages will do for them, which in selling parlance is called the benefit. For example: A TV might have the feature of internet connectivity and a remote control qwerty keyboard; the advantage is that the customer can now access and interchange internet and TV services using a single system; and the benefit is that the customer saves money, space, and a lot of time through not having to change from one piece of equipment to another. It's the saving in money, space and hassle that the customer buys. A sales person who formulates a sales proposition or product offer around those benefits will sell far more Internet TV's than a sales person who simply sells 'TV's with internet connectivity and remote qwerty keypads' Moreover the few customers who recognize the product benefit by its features and advantages will also recognize all the competitors' products too, which will cause all the sales people selling features and advantages to converge on the most astute purchasing group, leaving the most lucrative uninformed prospects largely untouched. The aim is to formulate a product offer which elegantly comprises enough of what the product does and how, with the most important or unique benefits for a given target market or prospect type.

e-Tailing USPs (unique selling points/propositions)

The strongest benefit for a given target sector is often represented by the term USP, meaning unique selling point or proposition (for many companies no real uniqueness exists in their USPs, so the term is often used rather loosely where the word 'strongest' would be more apt). Real or perceived uniqueness is obviously very important because it generally causes a prospect to buy from one sales person or supplier as opposed to another. If there were umpteen WebTVs on the market, the ones that would sell the best would be those which had the strongest unique selling points. Price is not a USP; sure, some people only buy the cheapest, but most do not; most will pay a little or a lot extra to get what they want. As with the example of the WebTV, an advantage that produces a money-saving benefit is different to straight-forward price discounting. A low price is not a benefit in this context, and any product that is marketed purely with a low-price USP will always be vulnerable to competition which offers proper user-related benefits, most of which may come in the form of a higher value, higher price package. What makes it difficult to succeed all the time with a fixed USP or series of USPs is that one man's USP is another man's dead donkey - USPs by their nature fail to take account of a prospect's particular circumstances. The name itself - unique selling point - says it all. Purchasers of all sorts are more interested in buying, not being sold to. Each type of prospect has different reasons for buying. Market sectors or prospect types with smaller houses and fewer rooms are more likely to respond to the space-saving benefit of the WebTV as the product's main USP. Market sectors or prospect types with big houses and lots of big rooms are more likely to regard the time-saving benefit as the key USP instead. A sector which comprises people who are not technically competent or advanced, may well respond best to a USP that the supplier could fail to even mention, ie., installation, training and a free technical support hotline. Where does that leave the sales person if his marketing department hasn't included that one on the list?..

e-Tailing UPBs (Unique Perceived Benefits)

This leads us to the UPB, meaning unique perceived benefit - a modern selling concept naturally evolved from FABs and USPs. A UPB is essentially a customer-orientated product offer. The problem with USPs and FABs is that they are largely formulated from the seller's perspective; they stem from product features after all. So if instead of looking at the product from the seller's viewpoint, we look at the need, from the customer's viewpoint, we can build up a UPB-based product offer that fits the prospect's situation and motives much better than any list of arbitrary FABs and USPs. First it comes down to knowing the target market segment, or the targeted prospect type, extremely well. This implies that we should first decide which sectors or segments to target, and it also shows why the planning and preparation stage in the selling process is far more significant and influential than it ever used to be. Each targeted segment or prospect type has its own particular needs and constraints, and these combine to create the prospect's or target sector's very specific buying motive. So if we can identify and then formulate a unique perceived benefit to meet or match a known or researched sector's specific buying motive, we can create a very well-fitting and easily recognizable product offer indeed.

e-Tailing Special features of e-tailing

Online Store Look
Every e-Tailing site has a store front with an identity, image and positioning. The online store front has its signature identity with features that trigger off browsing and persuade customers to buy its product offerings. The navigation triggers the browser buttons and the "cookies" lead the customers completely through the site's offerings.

Visual Density
Visual density is all about virtual space utilization like shelf space management in retail. On-line retailers use visual density very effectively to promote offerings and sell merchandise. A site's visual appeal ensures that the browser stays with the site for a long time.

On-line Merchandising
One of the major advantages of on-line merchandising is that the site can have an unlimited number of SKUs on display. This is because virtual space is almost unlimited. The offering mix can be made to appeal to a wide customer base. Back-end merchandise analysis can be made for the click stream analysis and conversions thereof. One can also measure the number of non-buyers who visit the site. Offers linked to purchase act as buying triggers. In on-line retailing, there is no obsolescence due to the fact that merchandise is not exposed at all nor is there an inventory carrying cost on the web. Expenses being low, there is potential for high margins in e-Tailing. The following table shows, gender-wise, the most shopped categories across the world on-line.

On-line Pricing
Prices of merchandise on-line are competitive compared to brick-and-mortar stores. This is because operating expenses saved by working through the Internet are generally passed on to the consumer.

e-Tailing

New On-line Retail

The recent development of sending e-greetings has helped customers get into the habit of using the Internet. Another area of development is bill presentment. Retail banking and related services through the Internet is also being promoted and a good deal of transactions takes place through the net. Shopping robots on the net help instant price comparisons to enable customers make purchase decisions.

Logistics and supply chain

The key success factor for on-line retailing is efficient logistics to ensure that the right product is delivered to the right customer at the right time. The supply chain network is triggered in an automatic fashion, meeting promised delivery dates. Alliances are critical in the areas of sourcing and vendor management, warehousing, transportation and effective order deliveries. Storing merchandise in satellite warehouses enables timely deliveries in operations that are spread over a wide area.

Promotions on-line
There is good scope for promoting on site products merchandised and sold on-line. The site itself can host links of products/ services offered by other companies for a fee. Banners, crawlers, browser buttons, URL links, etc. can be put on other non-competing sites. There is a lot of opportunity to create customer stickiness by constantly communicating with them through e-mail. Personalized offerings can be made to individual customers based on individual's shopping characteristics.

e-Tailing Advantages of e-tailing

-Move from physical space to cyber space. -No location boundaries. -Wider spectrum of customers -Non-geocentric buying habits of customers.

BENEFITS
Reduced cost due to absence of middlemen. Saves time. Offers a wide range of products to select from.

Challenges for e-tailing

On-line merchants must cater to increasingly on line-savvy, time-crunched consumers.

Competitors are just a click away

When consumers search, they have multiple options available, and many use search to navigate the Web rather than type in or bookmark specific sites.

Visitors can disappear seconds

On line consumers are goal-oriented shoppers. If they don't immediately find what they're looking for, they're gone in seconds.

Shopping is a multi step process.

Consumers love to browse. Many spend a fair bit of time visiting several sites just to gather information. They may also compare the offerings of several competitors before hitting the "buy now" button.

e-Tailing
Time between initial visit and purchase has increased.
Increasingly financially challenged consumers may wait longer before buying.

Customers wait for merchants' best offer.

Having been seduced during the holiday season with free shipping and handling and other price-driven offers, consumers have been trained to wait for a special deal.

Pitfalls of E-Tailing
No Theatrical Ambiance
On line retailing site does not have a theatrical ambiance which can be felt by the customer.

No Emotional Experience There is no emotional shopping experience that the customer

can get in e-Tailing as he would in a brick-and-mortar environment.

Intangible Merchandise The customer cannot hold, smell, feel or try the product. Security Issues Customers on-line are reluctant to part with their credit card details on the
net, fearing they may be misused. Customers are not yet convinced that these methods are foolproof.

Impersonal Customer Service Indian customers are used to tangible personalized

customer service which on-line retailing cannot provide. Some organizations have tried to use the Internet along with their brick-and-mortar operations. It is just a matter of time before on-line retailing picks up in India. If there is consistency in quality and delivery on time, certain convenience categories like books and music will undoubtedly perform well.

10

e-Tailing Bottlenecks Faced By E-Retailing in India

Problems with the Payment System
People in India are not used to the online shopping system and moreover the online payment system through the credit card is also totally alien to them. Most of them do not avail of the transaction facilities offered by the credit cards. They are also dubious regarding the online payment system through the credit cards. Hence different payment options should be made available to them like the credit card, cash on delivery and net banking to give them further assurance.

Problems with Shipping The customers using the online shopping channel should be assured that the products that
they have ordered would reach them in due time. For this the retail companies have resorted to private guaranteed courier services as compared to postal services.

Offline presence
The customers should be assured that the online retailers are not only available online but offline as well. This gives them the psychological comfort that these companies can be relied upon.

Products offered at discounted rates

The online retailers save on the cost of building and employee salaries. Some part of this benefit should also be enjoyed by the online customers by a reduction in the price of the product. The customers should be conveyed this message that they are getting the products at a discounted price.

Language Problem
Most internet retail shops use English as their mode of communication. English may not be comprehensible to the majority of the Indian population . To increase the customer base, content in the online retail shops should be provided in local language.
11

e-Tailing

Tactile
Another reason why the concept of e- retailing or online retailing has not gained prominence in India is that the Indians prefer to touch the products physically before buying them. This facility is provided through the multi-brand outlets, not available online. Studies have revealed the preferences of the customers towards the traditional shopping methods. Hence the retailer online should first make it a point to spot the potential customers and accordingly plan out the product. If the customers are more open to online shopping, then nothing can be more beneficial. They save the time and effort to visit, departmental stores, shopping malls, etc. products can be delivered by a click of the mouse. Another problem is that the retail industry is standing on its point of inflexion and considering its infant stage, it would take time for the new concept of e-retailing to take off.

Some online retailing sites in India

In this race it has become very difficult to determine the online retail store that makes the products available at convenient and cheap rates. From this very difficulty has cropped up comparison sites. Comparison is done on the basis of an index which is constructed from the data available from different shopping sites. The comparison sites not only help to choose the online sites that would be providing the best deal but also offline as well. Sites like Rediffproductsearch, Compare India.com have constructed the data that is taken from the conventional local retailers. These sites help the customer in finding out the local retail store that will best suit his purpose.

E-shopping

Infibeam generates more than 22% buzz among the 27 e-shopping website analyzed followed by BookMyShow which has a 14% share

Both eBay India and Flipkart enjoy 12% share in the buzz.

12

e-Tailing

CASE STUDY
The Flipkart Revolutionizing Online Shopping in India
Flipkart is an Indian e-commerce company synonymous to online shopping as LIC is to life insurance in India. In its initial years, Flipkart focused on online sales of books but it later expanded to electronic goods and a variety of other products. The cash-on-delivery model adopted by Flipkart has proven to be of great significance since the credit card and net banking penetration is very low in India.

E-commerce Revolution
The e-commerce is changing economy and affecting all aspects of business globally. Today, no company can afford to ignore e-commerce. It is even predicted that e-commerce will become part of the core business functions just like accounting, marketing, etc. India is currently in

the midst of an e-commerce and m-commerce revolution. The arrival of the Internet, followed by the escalating growth of Web-based businesses is leading to e-commerce both on the B2B and the B2C sides. The e-commerce trends in India are in perfect accordance with the sweeping changes taking place in the global markets. The sector started in India during 1999 with companies such as Firstandsecond.com and Fabmart aspiring to become the Amazon of India - the biggest online provider of books. Rediff was one of the earliest companies to become a part of the e-commerce wave in India and started operations with knick-knacks. At that point Apnaloan was one of the leading providers of online loans and Sify.com had become a part of the industry as well. Shaadi.com, a leading marriage portal, also started its operations at around that time. Some of the aspects of Indian e-commerce that are unique to India (and potentially to other developing countries) are Cash on Delivery Direct Imports. Cash on Delivery as a preferred payment method. India has a vibrant cash economy as a result of which 80% of Indian ecommerce tends to be Cash On Delivery. Direct Imports constitute a large component of online sales. Demand for international consumer products (including long-tail) is growing much faster than in-country supply from authorized distributors and e-commerce offerings.
13

eTailing

WWW.FLIPKART.COM
History of Flipkart.com
Sachin Bansal & Binny Bansal graduated from IIT-Delhi with a degree in Computer Engineering was working forAmazon.com before quitting and launching their own company Flipkart.com. Flipkart was launched in 2007 with the objective of making books available to everyone who had internet access initially they used word of mouth marketing to popularize their company. A few months later, the company sold its first book on flipkart.com-John Woods Leaving Microsoft to change the World. Along with time, it later diversified across various categories including and in 2010

branched out to selling CDs, DVDs, mobile phones and accessories, cameras, computers, computer accessories and peripherals, and in 2011, pens & stationery, other electronic items such as home appliances, kitchen appliances, personal care gadgets, health care products etc. Further in 2012, Flipkart added A.C, air coolers, school supplies, office supplies, art supplies & life style products to its product portfolio. Flipkart is rapidly expanding its network of warehouses, distribution centers, procurement operations and 24/7 customer support teams. The company has its own delivery network in 37 cities and is set to expand this in the current financial year. With a team of around 4,800 members, the company operates from offices and warehouses in seven Indian cities. Today, as per Alexa traffic rankings, Flipkart is among the top 20 Indian Web sites and has been credited with being India's largest online bookseller with over 11 million titles on offer. Flipkart broke even in March 2010 and claims to have had at least 100% growth every quarter since its founding. It 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.

14

eTailing

Marketing Efforts
Despite of being on online platform, Flipkart has started with word of mouth marketing strategy because Flipkart was started on a modest budget. The initial capital was sourced from personal money and did not have a huge marketing budget. Hence it was relied heavily on word-of-mouth marketing to promote the site. Moreover, when it comes to mediums like e-commerce, word-of- mouth marketing works extremely well as customers rely on the experience and feedback of their friends and peers before they try out a site.

India with its growing number of users makes Facebook a very potent force for marketing for Ecommerce websites, flipkart is no more exception in this case. Flipkart in its social media initiatives aims at facilitating an easier conversation channel for customers and users. Conversations are to the point and are targeted at specific issues, thoughts and ideas.

Flipkart.com began activities to make its presence felt on Facebook and Twitter about a year ago. The company has also used LinkedIn to connect with people. The popularity of Flipkart has grown through recommendations, people recommending the site to their family, friends and co- workers. And what better platform than social media to leverage

word-of-mouth! Flipkart.com recognized that using social media is about being

human. The people who manage their channels infuse Flipkart's culture and personality in what they do or say in tandem with their own personality. Social Media have feedback mechanism built into them, which needless to say benefits both the customer and the brand, says Mr. Sachin Bansal, CEO and Co-founder of Flipkart.com. What's key is to listen to what is being said about you (as opposed to hear), and for that matter being said directly to you. Users will be brutally honest if you give them an opportunity. The onus then lies solely upon you and your brand, about

15

eTailing
what you do with the feedback. That's where we've seen tremendous benefit. Transparency and Honesty is the key. If you value these traits as an organization, Social Media will help amplify it, adds Mr. Bansal. Flipkart very wisely used SEO (Search Engine Optimization) and Google Ad-words as the marketing tools to have a far reach in the online world. There were particularly 2 things that are worth mentioning.

A. Yahoo News: It was really interesting the risk they took, until last year Flipkart had a feed of Yahoo News on its product pages to increase the keyword density and introduce original content on the page, as the product description across all books sites is same. This was removed later as it was violating the Yahoos copyright on using the service for a commercial site. B. We Do Not Sell Used Books: This is one more SEO trick. If we check the Wayback machine we will find the following text. We Do NOT sell old books or used books. All the books listed at Flipkart.com are new books. The books listed at Flipkart.com are NOT available for free download in ebook or PDF format. The magic of this text is that if one search for <book name> free ebook or <book name> pdf download would always get Flipkart among top results. As a result Flipkart.com has a strong presence on Facebook, with a staggering number of fans. The company has more than 1,112,431 fans, 15,547 talking about this and has used easy, interesting conversations to engage them. Flipkart.com has more than 22,500 followers on twitter. Flipkart.coms Alexa global ranking is 262 while its India ranking is 13.

16

eTailing

TECHNOLOGY ADAPTION
Flipkart Drives Innovation through Intelligent use of IT
The objective was to allow Flipkarts engineers to launch multiple versions of its website in real time, IT drives a new level of innovation.

The Main idea:

Amod Malviya, VP engineering, Flipkart, that came with a caveat. We had to be careful to not let our rapid growth kill the innovative spirit of the company, he says. Thats a valid fear. In the business of innovation, complacency holds no ground. Malviya knew he would have to empower users with new tools to innovate and stay ahead of the pack. But creating a new process wasnt the solution. Processes force people to do things in a certain way, killing their creativity. If you remove the bureaucratic headache, people are encouraged to think freely," says Malviya. While he admits that this approach opens new doors to risk, he knows that it also encourages a fearless culture of innovationa must-have in the e-commerce business.

The Project:
With that goal in mind, Malviya implemented a framework. The framework has two components: One measures the performance of the website through various defined metrics. The second, more interesting one, uses an A/B framework (used to test the success of web marketing campaigns), allows multiple versions of the site to be live simultaneously. This helps the company conduct live experiments by siphoning off a small portion of the traffic and studying the results. Both components work in tandem. The metrics tool is a dashboard that measures the websites performance on various parameters. For example, if the transaction rate falls below a certain limit, systems are immediately alerted. With the A/B component, Flipkarts engineers can also

17

eTailing
rapidly implement their ideas. When someone proposes a new idea, a lot of precious time is spent debating what-if scenarios. Now, we can implement an idea, while mitigating its risks. For example, whenever an engineer wants to change the design of the homepage, the A/B framework redirects 10 percent of Flipkarts traffic to the new design. They can evaluate the impact of the change with the metrics collection tool. If it leads to a dip in sales, they can immediately roll it back, and less than 10 percent of traffic is impacted. We started streaming metrics on large screens on the engineering floor so that engineers could track performance in real timeunlike most websites that review their performance only once in a week or a month, says Malviya.This has been a huge hit with business users who can now float new products and toy with business ideas.

Flipkart Scales PHP

Flipkart generates thousands of sales every day which means the engineering team that keeps the show going have a tough task to do. Even a minute of downtime would mean serious loss of business and the responsibility is quite high on the engineering team. So the Engineering team at flipkart scales PHP to manage a highly scalable environment.

Flipkart uses Open Source Technology which is flexible, inexpensive and well trusted. Flipkart Run on LinuxHA instead of expensive hardware LBs. The site was moved from Apache to nginx for better performance and as a results 10x improvement in performance.

18

eTailing

Flipkart Supply Chain Model

The role of logistics in the successful functioning of an e-commerce venture is indispensable. All these innovative services will be ineffective if the products do not reach the customers on time. Here are some Best Practices of the Supply Chain of Flipkart:

Building the Suppliers base

The Company has established a network of more than 500 distributors and only stocks frequently ordered items. Items like the 'Long tail' are almost always sourced from suppliers in real time and as and when the customer places an order.

Building Infrastructure for Operations

The Company has 4 offices in 4 metros cities with more than 500 employees. Warehouses of the company are located in 7 cities including the metros. 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.

The Process of Supply Chain

The first step in buying the products like books online from the Filpkart.com site by making payments using payments options like credit/debit card, cash-on-delivery, net banking, cheque/DD and money order and enter the phone number and address where the items need to be delivered. Depending on items purchased they are packed and shipped accordingly for example mobile phones and books are packed differently as per requirement and also all items have transit insurance against theft and damages that may be caused while they are in transit. Flipkart bears the cost of delivery and this make them give a reason/motivator for improving efficiency at every point of supply chain. This also makes them differentiate from their competitors.

19

eTailing
Now for delivering the items depending upon the area where the item need to be delivered either courier, Indian post or own internal logistics arm is used. The delivery time varies between less than 24 hours and 3 weeks depending on the location and availability of the product like the products which are imported take 3 weeks time to get delivered to the customers. The inter-city, trans-zone deliveries are made using air cargo. For satellite cities and others in close proximity, products are transported overnight by train or truck. For the local parts of the cities where the warehouses of the company exist products are delivered using two-wheelers, bicycles, or on foot depending upon the proximity of the place and because of this many of the deliveries are made within a day of the order being made. All the Team Members have been trained to work efficiently to meet customer expectations.

Use of Information system

The Company use sales to predict the inventory levels. The warehouses are split into multiple areas inventory, packing, shipping and so on. The stocks are replenished every 24-48 hours. In the Back End, Flipkart stores details of all the transactions that need to be carried out. They have an understanding with their associates for order tracking, reconciliation and MIS (Management Information Systems) reports. The private courier companies in turn have their own ways of tracking every package. The customer is also updated about the status of his shipment via message, email or through the website. When the product needs to be returned then due to the companies understanding with the courier companies it happens without any disputes or problems efficiently. Flipkart takes care of the after-sales needs of its customers with regard to delivery of an item or addressing grievances including delayed delivery by the logistics partner, or addressing issues when an incorrect product is delivered. In the case of electronics, warranty and after-sales service is largely the responsibility of the manufacturer. Flipkart does however facilitate interaction between the customer and manufacturer/service center as and when the need arises.

20

eTailing

Flipkart Acquisition:
Flipkart has acquired many organizations for expanding its business and to give a good experience to its customer in online shopping. Name of the Year Organization A social book discovery tool. The stated goal was to give 2010 WeRead Flipkart a social recommendation platform for buyers to make informed decisions based on recommendations from people within their social network. 2011 Mime360 Mime360, a digital content platform company A Bollywood news site that offers updates, news, photos and 2011 Chakpak.com videos.Flipkart acquired the rights to Chakpaks digital catalogue which includes 40,000 filmographies, 10,000 movies and close to 50,000 ratings. Letsbuy.com is India's second largest e-retailer in electronics. 2012 Letsbuy.com Flipkart has bought the company for an estimated US$25 million.Letsbuy.com had been closed down and all the traffic of Letsbuy is diverted to Flipkart. Description

21

eTailing

Statistics:

Demographic Information

22

eTailing

Flipkart Revenue:

23

eTailing What makes Flipkart a super successful ecommerce portal?

Customer Service
They always strove to provide great customer service. Flipkart customers are more happy than with some of their competitors like Tradus.in, Indiaplaza.com. The founders' passion for the consumer Internet space manifests itself in the brand, which is synonymous with customer service and satisfaction. Don't count your customers before they smile' is the company's operating mantra.

First Mover Advantage

Flipkart still enjoys the top-of-the-mind brand recall as far as buying books is concerned. Other portals such as Uread and Dial-a-Book are still struggling to register their brands into the consumers mind. Over the years, Flipkart has diversified quickly; they now sell electronics to mobiles to home appliances.

Cash on Delivery
One area where Flipkart has scored strong is reading the virtual Indian consumer mind. Though the ecommerce user has matured, a large segment is still hesitant to make transactions using credit/debit card. The cash-on-delivery model has undoubtedly got them with going with the web conservatives.

Well-Marketed
It initially started with word of mouth and social media, and the Bansals have carried on the momentum well. Apart from investing in technical, operational and logistical capabilities, Flipkart, like any other strong brand, have invested a lions share in advertising, thus giving the brand a significant visibility. Today, Facebook likes stand close to 1 million.

24

eTailing
Easy to Buy
Again, Flipkart has understood the factors that dissuade an online user in India, by allowing them to buy products without registering. Alternatively, theres Facebook and Twitter sign-in. This makes its user to buy a product without registering and remembering another online password. Moreover, one get a 15-20% discount on every book purchase and free shipping for every order of more than Rs. 200. I can tell from my own experience that the delivery is superfast if the product is in stock.

E-commerce in the DNA

A critical factor in Flipkarts success, especially during the initial years, is that the founders are ex-Amazon employees, hence bringing in the required expertise and skillset needed to run and grow an ecommerce portal. Sure they possess great entrepreneurial skills too, which when blended with vertical knowledge, has spun great success for the 5 year old Flipkart.

Customer Retention Rate

Flipkart's reason of success is that it has a great customer retention rate, it has around 15 lac individual customers and more than 70% customers are repeat customers i.e. they shop various times each year. Acquisition of customers can cost five times more than retaining current customers. The company targets to have a customer base of 1 crore by 2015.

25

eTailing

Future Prospects:
India has an internet user base of over 100 million which shows that the e-commerce industry with the increased internet penetration will be the service sector's growth engine in India. Among the challenges faced by the industry is its dependency on the service providers like suppliers, logistics service providers, etc. whose service in not up to the expectation and are affecting the service of the online companies. Seeing the prospects of growth a lot of new online retailers have come up and there is a price war going on to attract more and more customers which is putting pressure on the profitability of the companies so it has become extremely important to manage cost to increase profits which is only possible by building an efficient backend- a nationwide delivery network, warehouses , inventory management , logistics, efficient teams to manage all this therefore supply chain management becomes an important factor on which companies depend to sustain in this industry. Flipkart obtains funding from various sources which is being utilized by the company to include more diversified product, innovation, for strengthening supply chain capacity and upgrading technology

platforms, including automation at warehouses.

26