Problems with Flipkart

Problems with Flipkart (why?)

1. Falling market share, due to competition from existing brands like Amazon, Snapdeal and Paytm and also new Players like Shopclues
2. No longer a lean organization, need for downsizing, which impacts image
3. Deferring placements, creating negative image on wannabe employees and academic institutions
4. Legal issues in the white goods market, complaints from xyz to Competition Authority of India
5. Improper execution of Major Sales Promotion events like Big Billion Day
6. Losing out the edge on price competitiveness compared to its competitors – PayTm, Amazon, Snapdeal
7. High spend on advertisement, revenue/advertisement cost
8. De-valuation of Flipkart from $15 bn to $11 bn. Why? - possible reasons - e-commerce industry was overhyped initially, now it's turning mature, company still not profitable so losing investor’s trust
9. Sometimes fake/wrong products are being delivered due to inefficient supply-chain management, losing customer trust/loyalty

(Edited)

Positioning in Increasingly Competitive Market

• There is stiff competition from worldwide players and new entrants alike- Amazon, Snapdeal, Shopclues, PayTM
• This translates to “discount wars” and loss leading strategies which deepens losses
• Positioning proposition not constant over the years. Flipkart reversed its decision to go “app-only” on mobile. Currently message is “Flipkart matlab bilkul pakka”, highlighting the importance of customer service
• Not yet able to penetrate into Tier I and Tier II cities as per initial plans, thus not able to increase customer base at a good pace

Scaling Issues, Investor outlook instead of customer outlook

• Since Flipkart is not yet profitable, it is reliant on external funding to support expansion, price cutting or big promotional events
• Not able to allocate adequate resources for long term investments to improve customer fulfillment and after-sale service
• High spend on advertisement or cost of customer acquisition, which is leading to further losses
• Not a lean organization at current scale, which raises operational costs and causes negative publicity after layoffs

Negative publicity, perception

• Controversy surrounding stock-outs on Big Billion Day, under-fulfilling on promotional events
• Allegations of price variability to offer illusory discounts
• Cases of fake products being delivered, which makes a dent on brand loyalty
• Controversy surrounding deferring placements offered to IIM-A graduates
• Legal trouble in the White Goods Market, Complaints to Competition Authority of India

Recommendations: -

1. Since online retail is going to boom in the coming years, it is necessary for this industry to have logistics support. So, since Flipkart is already having its own logistics arm E-kart, it can provide this logistics service to its competitors in online retail industry.
2. In this type of industry, price matters a lot to customers. If same product is offered by two e-tailers at two different prices, customers will go for the lowest price. So, Flipkart should try to offer the products at lower prices. This can be done by optimizing its logistics services. Since logistics cost plays an important role in determining the price of the product. Filpkart should try to optimize its supply chain in such a manner that its supply chain costs should be very less and try to offer products at lower price compared to its competitors.
3. Flipkart can also employ relationship marketing into it. Instead of mainly focusing on customer acquisition, it should also focus on customer retention. Because loyal customers are more profitable when compared to new customers.

source : - http://flipkartforbusinessstrategy.blogspot.in/2014/02/strategic-analysis-on-flipkart.html

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Flipkart First vs Amazon Prime

Opportunity for Flipkart to change perceptions of inferior customer service to Amazon

Offers opportunity for diversification into other “Threat” areas such as Netlix-rival Amazon Prime Video, currently not available in India