Group Members Ateet Chaturvedi – 10

Ashvini Khandekar – 24Nayana Premchand - 43

Flipkart - Background

• Launched in 2007 as an Online Book Store • Initial Investment : $10 Thousand• Founder Memebers : Sachin Bansal & Binny Bansal

(ex-employees of amazon.com)• 2010: Expanded into Media, Consumer electronics,

apparel and Beauty Care • 2013 : Catering to 12 Product Categories • Largest e-retailer in India with current market

valuation $1.5 Billion

• Till 2010 Flipkart was vertical player• Flipkart back end operations were conducted in

Singapore under Flipkart Holdings Singapore• Front end company was known as Flipkart Logistic

Services• For growing it backend operations company required

continuous funding

Flipkart - Background

6 rounds of funding

The Journey

The Product Categories

• Flipkart’s aim was to first become the market leader with a dominant market share across different categories – Invested heavily in Technology & Supply Chain

• Opted for speedy routs of acquisitions

– weRead (ebooks)

– Mallers Inc : digital music content

– Chakpak.com : Bollywood news & updates

– Letsbuy.com : Consumer Durables

Flipkart – Business Philosophy & Strategy

• Focusing in Revenue and Customer Acquisition & retention – Own Inventory & Warehouse – Provided Value Added Service

• But this Customer Centric Strategy paid back average – Got 70% loyal and repeated customers – Did not resulted into profit

Flipkart – Business Philosophy & Strategy

• Low Entry barriers • Underdeveloped Market for E-Commerce – Minuscule market of $500 Billion Indian Retail

Sector – Low penetration rate of Internet Usage

• No Competitive Advantage – Price, User friendliness of Website, Product

Options, variety and Speed of Delivery

Flipkart – New Players / New Challenges

• Competitors following / imitating all the strategies – COD, Free Shipping, Free Returns, Discounts– Expansion in tier 2 / 3 cities by market place model– Minimal Charges of shipping if value is below $8.15– To increase efficiency & cost cut Flipkart laid off employees

• Advertising & Publicity – Jabong accepted aggressive strategy – Invested 3 times more in advertising + Digital Marketing– Operated 24 X 7– Poaching Flipkart employees

Flipkart – New Players / New Challenges

• Re-evaluated its cost structure– To enhance efficiency – Stopped different types of discounts

• Exit from Non-profit product Categories – Cosumer durables – Digital Music Vertical

• Focused on profit making categories – Fashion Retailing (Myntra)

Flipkart – Rationalise Product Mix

Flipkart – Rationalise Product Mix

• Amazon’s entry Strategy in India – Vast Selection, Low Prices & Fast Delivery – Entered in India with online product search engine

Junglee.com – Started with alliances with 100 third party sellers

• Difficult Investment from VC – Lengthy period for breakeven – Only 11 out of 53 Ecommerce retailers could get

the funds– Flipkart & Snapdeal required $200 - $500 Million

to get profits

Flipkart – Gearing up for Amazon

• Flipkart got $200 Million funding from VC – Largest funding ever received by any ecommerce

player – Put far ahead of its competitors in terms of scale

& Technology & created strong position against Amazon

– Rejected potential 10 acquisitions – Adopted Hybrid model = Inventory Model + Online

Marketplace

Flipkart – Gearing up for Amazon

Flipkart – Gearing up for Amazon

• Revisiting Competition Positioning – Launch of E-book apps – Expansion in E-book library from 2,50,000 to

1Million– In talks with India Post reach Tier 2 & 3 markets– Single Day Guarantee Delivery

Flipkart – Gearing up for Amazon

What is Hypercompetition?

• The term hypercompetition is used to describe a dynamic competitive world in which no action or advantage can be sustained for long.

• Under such conditions everything changes because of the dynamic maneuvering and strategic interactions by hypercompetitive firms.

Driving Forces of Hypercompetition

FallingEntryBarriers

Hypercompetition

Rising Deep Pockets

AcceleratingTechnologicalAnd Business Model Change

Fragmenting and Escalating Customer Demands

How are the battles of hyper competition fought and on which arena’s (Four Arenas) – Richard D’Aveni?

• Price and quality

• Timing and know-how

• Stronghold Creation/Invasion

• Deep Pockets

4 Arenas

• Adopted predatory pricing at the time of the

launch of the new product categories

– Selling good below actual cost

– COD + Free Shipping + Free Returns

– Delivery within 24 hours

Price and quality

• Backward Integration by virtue of own

warehouses

– Delivery within 24 hours

• Addition of 3rd party seller

• Hybrid Model

Timing and know-how

• Invested heavily in Technology & Supply chain

• Speedy Acquisition to diversify in to various product

categories

– weRead (ebooks)

– Mallers Inc : digital music content

– Chakpak.com : Bollywood news & updates

– Letsbuy.com : Consumer Durables

Stronghold Creation/Invasion

Product Categories Launched

Deep Pockets

What is product rationalisation strategy? (use 7S of hyper competition by Richard D’Aveni)

7 S’s of Hypercompetition

• Superior Stakeholder Satisfaction• Strategic Soothsaying• Positioning For Speed• Positioning For Surprise• Shifting The Rules Of Competition• Signalling Strategic Intent• Simultaneous And Sequential

Strategic Thrusts

a vision for market disruption

key capabilities to use across markets

disruptive tactics in a hypercompetitive environment

Stakeholder satisfaction • Revisiting Business Philosophy :

India’s Largest Retailer to

The most profitable online retailer in India

Strategic soothsaying• COD : Understanding that Indian Customers were not

comfortable of online payments... Flipkart started with COD• Predictive analytical technology to analyse consumer buying

behaviour

Speed

• Hybrid model: Inventory Model + Online Market Place

• Repositioning of Books Category – App on iOS and Windows based phone

• Immediate announcement of within 24 hours delivery

Surprise• Diversification and not specilization • Increase in categories to 20

Signal

Shifting the rules of market

• Value added services• Distribution Model : – Inventory based– Hybrid = Inventory Model + Marketplace model

Simultaneous or Sequential ThrustsSimultaneous or sequential thrusts refers to a company using several moves, such as a series of simultaneous product announcements or geographic market entries done in concert, to mislead or confuse a competitor.

Advantage Amazon

• Philosophy: Growth Over Profit

• Better Brand Image• Wider Selection • Lower Prices• Faster Delivery • Financial Muscle Power

Flipkart fight back

• Philosophy: Customer Satisfaction over Profit

• Scaling up VC• Biggest Obstacle– HR Issues– Not Only Local, But Global

• Concentrating on Mobile Shopping (From 20% to 50% Rise)

ConclusionAnalyst Belief = > E-retail would be hypercompetitive and many argue that only two rivals could Co-exist Profitably