E commerce industry

INDIAN E-COMMERCE INDUSTRY

Swayam D. Faiz A. Reetu Y. Lavish S. Prakash s.

INTRODUCTION E-Commerce stands for Electronic Commerce

Pertains to trading in goods and services through the electronic medium

It is all about speed, connectivity, and sharing and exchanging goods, services and informationJavalgi and Ramsey (2001)

Ecommerce is the use of the internet “for exchanging information of value between firms and their trading partners, employees, and customers with the absence of geographical and time restrictions”

Barnes-Vieyra and Claycomb (2001,p.13)

SCOPE

India is showing tremendous growth in the Ecommerce With the middle class of 300 Million people, online shopping

shows unlimited potential in India

GROWTH

E-COMMERCE IN INDIA Various Websites providing variety of goods and services

such Flipkart, Home Shop 18, MakeMyTrip, Bigbasket, Bagskart etc.

There are total 1938 e-commerce companies in India(Oct, 2012)

Domestic e-commerce market has the potential to grow between $ 125 Billion and $ 260 Billion by 2024-25

In India E-commerce is facilitated by Information Directories and Banks (Net Banking, Phone Banking, Credit Card, Debit Card)

Most difficult challenge for Indian e-commerce industry is : We still belief of touch and feel concept.

People are not comfortable with online money transaction

SWOT ANALYSIS

STRENGHTS

Niche product selling Low barrier and overhead cost Direct customer communication WEAKNESS High customer expectations Search engine unpredictability Govt. rules and regulations Indian's are still believe in touch and buy concept Active internet users are very low in number

OPPORTUNITIES

Global exposure 24/7 business Increasing network across the companies FDI in ecommerce has stopped, so Indian players

have a good opportunities THREATS Direct selling of the brick and mortar shops are

increasing Chance of hacking: security issues Future legislations Less scope of innovation

INTRODUCTION TO FLIPKART

Flipkart is an Indian e-commerce company headquartered in Bangalore, Karnataka

Founded by Sachin Bansal and Binny Bansal in 2007 Started with 4Lacs Then added two venture capital in 2009(Accel India) and

2010(Tiger Global Management) Flipkart focused on online sales of books but it later

expanded to electronic goods and a variety of other products

A BRIEF HISTORY OF FLIPKART GROWTH

Source: Flipkart Blog



FLIPKART FUNDING

Flipkart

Venture capitalPrivate Equity

OVERVIEW

Bansals controls about 37% of flipkart equity,while Accel partners and Tiger Global controls 48%.

Management holds remaining 15%. Total Revenue of the company Rs 500 crore in 2011-2012. As per the previous year Rs 50 crore in 2010-11.

Largest online Book retailer in India with 80% market share. Two million customer base and total daily sales of Rs 2.5

crore.

WHY FLIPKART IS LOSING MONEY? MRP of Strategy Books Rs 499. Estimated cost at which flipkart gets it from Publisher Rs 299 (Assuming

40% Margin ) Cost of delivering it to a customer outside of eight cities Rs 344

( Assuming Rs 45 for delivery cost) Charge levied by logistics partners Rs 379( Assuming Rs 35 on order size) Price at which sold to consumer :Rs 324.

REMEDY OF THE PROBLEM

Increase the price of the books Changing Consumption pattern: Increasing the ticket size In future their logistics will increase. Hence costs related to delivery will be

reduced.

WHAT IS RIGHT WITH FLIPKART?

Understanding Customer psychology Gaining Trust Expanding the market Diverse Product Categories Good use of SEO Good use of Social Media Optimization Outstanding delivery Introduction of new technologies in regular intervals.

OPERATIONS OF FLIPKART Flip kart’s core competency lies in their Supply chain and logistics

Process of Supply Chain

1. Building the Supplier Base

2. Building Infrastructure for Operations

3. Use of Information system

Technological Overview Round the clock operations. Technology plays a critical role. Flipkart often refer to themselves

as a technology company doing e-commerce They use Linux as their implementation technology for resource

management, task management and file management Flipkart works with popular open source products such as Ubuntu,

Mysql, Apache

MARKETING OF FLIPKART

Word of mouth (initial marketing even now they want to satisfy customer so they come back for more)

Good use of SEO “We DONOT 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”

Good use of SEM Ads at proper places and use pay per click to pay for ads

STP

SEGMENTATION1. All internet users and shoppers TARGET

1. Flipkart concentrates on more Psychographic, which helps in deciding where to display ads online

2. They target online shoppers and people who don’t online shop (thus TVC to encourage them)

POSITIONING

1. Customer delight (low price, free shipping, replacement)

2. No kidding no worries

3. Online megastore

4. One stop solution

7 P’S OF FLIPKART

Product: Appearance –the ease in the website interface even for the

first visitor Quality –checking of the product before packing (visual test) Packing –different packing(eg. Bubble pack for electronic

items) Brands–all brands integrated in one website Warranty -one year warranty from the manufacturer’s side Service & support–guarantee delivery of undamaged product

or else replacement in 30 days

Price: Special discount As shipping is within India the shipping cost reduces Seasonal discounts Free shipping For expensive products transit cost is borne by

companyPlace: Tie ups with local vendors and courier firms (thereby

avoiding octroi charges) Company owned warehouse in major cities near

airport If the courier can’t delivery to the location the

product is shipped through government post

Promotion: SEO and SEM Word of mouth marketing TVC lately to encourage non-online shoppers More online marketing like FB, Twitter, linkedinPhysical Evidence: Different packaging for different product to ensure safe

delivery Flipkart the name goes with the online cart Design and packaging is common so customers can relate it to

the companyPeople: Service people, Sales Clerks, Delivery drivers, Managers,

Complaints department, Accounting, Warranty people, Technical people, all work for the customer ease, customer satisfaction and customer delight.

SWOT ANALYSIS OF FLIPKART

Strengths Top Indian ecommerce portal Diversified into electronic goods Two VC investment to build its own delivery system

thereby reduce delivery time Cash on delivery which is making 60% of its incomeWeakness Coordination with suppliers and courier was tough Price biasing to maintain the margins ( eg. Low price for

the best seller book and more price for the least wanted)

Opportunities Already working towards customer delight will obtain

customer loyalty gradually Supplier database interface with Flipkart website for

JIT procurement Mobile internet usage is increasing there by chances

of increase in sales through mobile shopping.

Threats Small players and emerging competitor Major players like Amazon In capabilities to manage certain costs like delivery

cost, bank charges.

FLIPKART ‘S NEW TRIANGLE: RAISING THE BARKey Success factors:• brand loyalty• User experience• Reliability

• convenience• delivery reach• delivery time• mobile shopping

• availability• product modes (printed/ e-books)• titles

Threshold factors: Brand awareness, price.

Competencies:• large self owned delivery channels• supplier network/ first to market• mobile shopping solution/ increased reach• innovation in services/payments/technology• excellent customer services• internet strategy (search engine optimization, platform advancement)• large loyal customer base.

Value proposition:

“Completely hassle free shopping experience with best services to everyone, everywhere and every

time in India”.

PEST ANALYSIS FRAMEWORK

SOCIAL 1. Better comfort level and trust in online shopping.2. High priority on time and convenience.3. Improving usage of Broadband and high computer literacy.

TECHNOLOGICAL 1. Advent of Mobile shopping.2. Increasing penetration rate of broadband and wireless internet.3. Better managed E commerce site for ease, privacy and advancements in net banking.

ENVIRONMENT(Healthy)

FUTURE PLANS OF FLIPKART

By 2013-14, Flipkart plans to:-• Offer new categories on its website• Increase its footprint of warehouses• Expand operations into new cities(Tier 3)• Increase staff size from 2000 to over 10,000• Grow revenues 10 to 30 times over

FUTURE PROSPECTS OF FLIPKART IN INDIA:-

Marketing is very important and it is generally believed that online people are easier to target.

The savings in marketing costs can be passed on and prices can be reduced.

Hence in future that helps Flipkart in reducing prices. FDI will help in improving the efficiency of supply chain. FDI will also help in boosting the confidence levels of the

customers in which foreign player will play an important role.

Hence in future by spending time on online by purchasing clothes and electronics goods will help Flipkart increase in future rapidly.

CHALLENGES

High inflator trend in the global and domestic economies

As capital expenses are being deferred because of huge increase of cost of capital

Then there is much pressure on existing asset to deliver operational performance

Government policies in most developed and developing countries have imposed very stringent norm for safety.

TRENDS AND OUTLOOK OF E-COMMERCE INDUSTRY IN INDIA Overall growth of Consumer & Supply side interest in

e-Commerce in India - Brands & Manufacturers getting online

Increase traction of Lifestyle categories and Women shoppers online

Role of Social Media marketing in driving e-Commerce growth

Potential from Tier 3 towns Impact of growth in Smart phones on e-Commerce Negative impact of rampant price cutting and

couponing in the industry - how will players make money ?

COMPARISON OF PRODUCTS

Flipkart

eBay

Jabong

Homeshop 18

Myntra

Books

Available Not Available Available Not Available

Mobiles &

AccessoriesAvailable Not Available Available Not Available

Computers


Cameras


Gaming Available Not Available Not Available Not Available

Music, Movies & Posters

Available Not Available Not Available Not Available

TV, Video & Audio


Home & Kitchen

Available Available Available Not Available

Pens &

StationaryNot

AvailableNot

AvailableNot

AvailableNot

Available

Belts, Bags & Luggage

Available Available Available Available

Watches Available Available Available Available

Beauty & Health Care Available Available Available Available

Baby Care


Toys


Not

AvailableCar & Bikes

Not Available Not Available Not Available

Not

AvailableFootwear & Clothing

Available Available Available

EBAY BUSINESS MODEL

In this type of Model any body can buy or sell

eBay

Marketing Person

Buyers

Business Developer

s

Sellers

THE PERCENTAGE BREAKDOWN BETWEEN EBAY'S DIFFERENT EXPENSE GROUPS

Sales and Marketing

40%

Product Devel-opment

20%

General Administra-

tion24%

Other16%

Chart Title

FLIPKART BUSINESS MODEL

WHEN COMPANY ORDER THE GOODS FROM VENDORS

CustomersFlipkart

Agents

Vendors

CONT…

WHEN COMPANY HAS THEIR OWN WAREHOUSE

CustomersFlipkart

Agents

Warehouse

JABONG BUSINESS MODEL

Customers

Jabong

Agents

Vendors

HOME SHOP 18 BUSINESS MODEL

Vendors

Channel Partners

Customers

Online Service Quality for Luxury Purchases

Good customer service 4.55

Money-back guarantee 4.48

Easy return or exchange of merchandise 4.46

Control over use of personal data 4.43

Site reliability 4.42

Ease of use 4.33

Wide product selection 3.99

Fast site 3.97

Information related to products/services sold 3.93

Wide range of shipping/delivery options 3.88

Brand name 3.65

Site personalization 3.55

Physical presence 3.49

Discounts or coupons 3.24

Personalized product recommendations 3.12

Recommendations to complement previous purchases 2.95Source: Forrester Research Inc., 2001

COMPARATIVE PERFORMANCE ANALYSIS : Key Success Factors Weight Flipkart Mynta HS18 Jabong Ebay

Brand Awareness 0.15 1 0.8 0.7 0.75 0.9

Delivery Time 0.1 1 0.8 0.6 0.7 0.7

Delivery Reach 0.1 0.9 0.8 0.7 0.75 0.8

User Experience 0.15 0.85 0.9 0.8 0.8 0.7

Reliability 0.15 0.9 0.8 0.7 0.7 0.7

Availability 0.1 0.85 0.7 0.7 0.7 0.9

Price 0.15 0.75 0.8 0.7 0.8 0.7

website design 0.1 0.7 0.75 0.65 0.7 0.6

Total Weighted Score 1 0.87 6.35 5.55 5.9 6

Total Market Share(%) 100 37 12 3 4 4

Purely based on assumption and market understanding

REFERENCES [1] Sinha (April 2009), “Ecommerce in India – The Real

Challenges” [2] Chaudhury, Abijit; Jean-Pierre Kuilboer (2002). EBusiness

and e-Commerce Infrastructure. McGraw-Hill. [3] Frieden, Jonathan D.; Roche, Sean Patrick (2006),

"Ecommerce: Legal Issues of the Online Retailer in Virginia", Richmond Journal of Law & Technology

[4] Miller, Roger (2002), “The Legal and E-Commerce Environment Today”, Thomson Learning

[5] Turban E, Lee J King D and Chung H M (1999),”Electronic Commerce: A Managerial Perspective”, Prentice Hall

[6] Ubois, Jeff (1995), “Wheels of Commerce- an Interview with commerce”, pp 62-69

[7] Megna, Michelle (2008); “E-Commerce Trends for 2008 and 2009”.

[8] Rastogi, Rajiv; “Country’s report on E Commerce Initiatives”.

[9] Internet World Stats

CONT… [10] Overview of E-commerce in India [11] 20 Hot E-commerce startups in India [12] Indian e-commerce at inflection point? [13] India broadband penetration growth [14] E-commerce growth with 3G Models of e-commerce in India [15] India B2C E-commerce Market Size [16] Consumer E-commerce in India [17] “Asia Pacific Online Retail Forecast, 2011 To 2016,” Forrester

Research Inc. Zia Daniell Wigder, with Steven Noble, Vikram Sehgal and Lily Varon.

[18] Indian Retail Market Size and Growth Estimates [19] Written by Piper (2012-08-10). "Name the India’s Largest

Ecommerce Company". Ecommerceforum.in. Retrieved 2012-08-14.

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E commerce industry