Professional Documents
Culture Documents
INSTITUTE of MANAGEMENT,
DELHI
FINAL PROJECT REPORT
A SUPPLY CHAIN STUDY
FLIPKART.COM
Submitted by
Sandeep Ghosh (212!1"#1$% A&an (!12!1"#1$%
A'(nash A))a*+a, ($-2!1"1$% Kan(.a A)a*+a, ($/2!1"#1$%
ACKNOWLEDGEMENT
We take immense pleasure in thanking Prof. Prashant Guta for having permitted
us to carry out this project work. We would also like to express deep sense of
gratitude towards him for guiding us, which helped us in completing the project in
time.
Finally, yet importantly, we would like to express our heartfelt thanks to our team
members, friends and classmates for their help and wishes for the successful
completion of this project.
Ta!"# of Cont#nts
Serial
Number
opic !age
Number
"# he internet retail industry in $ndia
"% ðodology
"' (bout Flipkart.com
") *ompany Structure
"+ !roduct and echnology eam
", -usiness .evelopment eam
"/ 0perations eam
*ustomer Support team
1ogistics
2everse logistics 3 returns processing
!rocurement
Flipkart4s Warehouse &anagement System
$nward !rocessing
Storage &anagement
0utward !rocessing
0rder !rocessing
0rder Ful5llment
$nventory &anagement
Supplier &anagement
*ustomer Support
$ssues and 2ecommendations
*onclusion
Th# $nt#rn#t r#ta$" $n%ustr& $n In%$a
he internet retailing industry grew by ')6 in %"## to 7 #" billion with
investments of about 7 8"" million over last year#. $t is expected to grow at a
compounded rate of '86 over the next + years. 0nline retail account for less
than #6 of the total retail market in $ndia 9compared to about +6 in the :S;,
and thus, presents a huge growth potential for international retailers%.
$nternet retailing in $ndia mainly focuses on non<grocery products such as
consumer electronics, media products, sports e=uipment, consumer
appliances and books> products that do not re=uire extensive touch and feel.
-ooks and gifts, however are the largest contributors. Several $nternet
retailing players are providing much cheaper prices compared with store<
based retailers, which is attracting consumers in $ndia. ?igh discounts are
primarily driving adoption while gaining the trust of consumers through fraud
proof options such as cash<on<delivery. $nvestments in logistics and
infrastructure and support by third party companies have led to ever
expanding reach. $t is evident that $nternet prices are projected to be more
competitive than any other retailers in $ndia. &ost $nternet retailers o@er
services, such as Aexible payment methods, warranties for electronic goods
and free home delivery. he prices from several players are very competitive
with all e<retailing players o@ering good deals on a variety of products in
order to attract customers.
!layers with a wide variety of products have managed to gain the most value
sales. $nternet retailing in $ndia is segmented under di@erent formats,
including vertical shopping, whereby the manufacturer is also the retailer,
multi<product $nternet retailers, such as Future baBaar, Shoppers Stop and
comparison<shopping. $nternational companies were not allowed in $ndia up
to %"#" as the government put a ban on F.$ in multi<brand retailing.
?owever, in %"## the ban was liberaliBed and over the forecast period some
of the major players, including (maBon.com, are expected to enter the $ndian
e<retailing environment. he industry, however, faces many challenges. he
foremost being high customer ac=uisition cost 9C2s #,+""; and small basket
siBe. 2epeat purchases are essential to recover ac=uisition spending.
*ompanies tend to hold extensive inventory of up to ' months in<order to get
discounts from their suppliers, this re=uires substantial investment. $n<house
logistics re=uire further investment and third parties are operationally
expensive < delivery costs +<#"6 of the product value. $nternet retailers are
Dburning cash to fuel growthD, o@ering discounts deeper than their pockets
and spending heavily on advertising and marketing'.
M#tho%o"o'&
We started with secondary research of the internet retail industry and the
major players through news articles, industry reports and databases. his
helped us to get an overall idea of the working of the industry and
understand its dynamics. hen we went on to do extensive secondary
research on Flipkart, its business model and all elements of its supply chain.
hen we did primary research in the form of interviews of &r. Shini !atel, and
&r !avan 2aghuveer both managers<operations and in<charge of S*& and
delivery. With their inputs on procurement, logistics, order processing,
supplier management and customer support and secondary research we
formulated a draft. ?owever, we identi5ed certain gaps and interviewed our
batch mates who interned at Flipkart. With the second round of inputs, we
were able to understand and analyBe FlipkartDs supply chain.
A!out ("$)art.*o+
Founded in %""/ by two $$ .elhi graduates, Flipkart.com is today $ndia4s
largest online shopping website. he etymology of the website lies in the fact
that the founders, Sachin and -inny -ansal envisioned it to be an online
store for books E hence the FAip4 suggests the Aipping of the pages of a book
while the Fkart4 is derived from the Fshopping cart4. $t has been cited as a
success story in the domain of online retail E a sphere generally dubbed as
impossible to succeed in $ndia. Started with an investment of 2s. ) lakhs by
the founders themselves, Flipkart has grown exponentially in the last +
years. his year they are expected to touch 2s. %+"" cr in annual revenues
at a y<o<y growth rate of )""6. ?owever, managing expansion at such
break<neck speed is not an easy task. here are several =uestions raised
about Flipkart4s pro5tability 5gures and core competence of Fdelighting4
customers. $n fact, Flipkart4s philosophy is so closely tied to ensuring
customer delight that pro5tability often takes a back seat. $t is a strategy
that has enabled them to gain lion4s share of the online retail market E but
their operations need to be studied in greater detail to understand if the
company really has a sustainable future. While there have been multiple
=uestions raised about creative accounting techni=ues and other apparent
5nancial irregularities on Flipkart4s books, in this report we4ll concentrate
primarily on the operations side of Flipkart4s business. From an operations
point of view, one of the fascinating things about Flipkart4s growth has been
the increase in number of SG:s and di@erent categories that they now
handle. While there are several specialiBed online retailers like myntra.com
or letsbuy.com 9recently ac=uired by Flipkart; who specialiBed in apparel or
consumer electronics respectively, Flipkart handles more than #) categories
of products. $ncreased number of categories complicates the entire supply
chain design and this is something that has been studied in the latter half of
this report.
Co+an& Stru*tur#
he entire organiBational structure of Flipkart is organiBed in three broad
teams as depicted
below.
Pro%u*t an% t#*hno"o'& Bus$n#ss D#,#"o+#nt O#rat$ons