Flipkart Case Analysis PDF

Preview

Summary

Flipkart Case Analysis...

Description

INSTITUTE OF MANAGEMENT, NIRMA UNIVERSITY

MBA-FT (2020-2022) Case Summary

FLIPKART FLIPKAR T Submitted T To: o: Prof. Sapna Parashar Submitted By: Parth Garg (201132) Neel Patel (201225) Sushant Batra (203155) Karanvir Singh (201321)

GROUP NO: - 8 Question 1- Discuss the Growth Pattern of Indian E commerce market in India.

Introduction In India, e-commerce has changed the way people do business. From US$ 38.5 billion in 2017, the Indian e-commerce sector is anticipated to rise to US$ 200 billion by 2026. An rise in internet and smartphone usage has sparked most of the industry's development. The ‘Digital India' program is expected to raise the number of internet connections in India to 776.45 million by September 2020. 61 percent of all internet connections were made in metropolitan areas, with 97 percent of those connections being wireless. Size of the Market The Indian online grocery industry is expected to grow at a CAGR of 57 percent from $1.9 billion in 2019 to US$ 18.2 billion in 2024. In the final quarter of 2020, India's e-commerce orders volume rose by 36%, with the personal care, beauty, and wellness (PCB&W) category benefiting the most. The Indian E-commerce sector is anticipated to expand to US$ 200 billion by 2026, from US$ 38.5 billion in 2017, thanks to increased smartphone penetration, the deployment of 4G networks, and rising consumer income. Flipkart, Amazon India, and Paytm Mall are projected to lead online retail sales in India, which are expected to increase by 31% to US$ 32.70 billion in 2018. Due to increased customer demand following the shutdown, smartphone shipments in India surpassed 150 million units in 2020, with 5G smartphone shipments surpassing 4 million. The Indian e-commerce GMV in festive season CY20 reached US$ 8.3 billion, a remarkable increase of 66 percent over the previous festive season. Similarly, during the festive season of CY20, the Indian e-commerce market saw a huge increase of 87 percent over the previous festive season, with 88 million users.

Initiatives by the government The Indian government has launched a number of programs since 2014, including Digital India, Make in India, Start-up India, Skill India, and the Innovation Fund. E-commerce growth in the country would most likely be aided by the timely and efficient implementation of such schemes. The following are some of the government's key measures to encourage E-commerce in India: The Government eMarketplace (GeM) had 1,071,747 vendors and service providers listed as of February 15, 2020, covering over 13,899 product and 176 service categories. Government purchase from micro and small businesses was Rs. 23,424 crore (US$ 3.2 billion) in fiscal year 2020-21.

The Department for Promotion of Industry and Internal Trade (DPIIT) is allegedly intending to use the Open Network for Digital Commerce (ONDC) to create standards for cataloguing, vendor identification, and pricing discovery in order to standardize the onboarding process of merchants on e-commerce platforms. In the broader interest of the country and its citizens, the department strives to give equitable chances to all marketplace actors to make the most of the e-commerce ecosystem. National Retail Policy: The government proposed a national retail policy that included five areas: ease of doing business, rationalization of the licensing process, digitisation of retail, a focus on reforms, and an open network for digital commerce, stating that offline and online retail must be managed together. In July, the Consumer Affairs Ministry published the Consumer Protection (e-commerce) Rules 2020, which required e-commerce businesses to show the nation of origin alongside product listings. Furthermore, the businesses would be required to disclose the factors that go into deciding product placements on their platforms. In October 2019, the Government e-Marketplace (GeM) and Union Bank of India signed a Memorandum of Understanding (MoU) to enable a cashless, paperless, and transparent payment system for a variety of services. To promote digitalization, the government established several programs such as Umang, Start-up India Portal, Bharat Interface for Money (BHIM), and others as part of the Digital India movement. Mr. Piyush Goyal, Minister of Commerce and Industry, urged start-ups to register on the GeM public procurement platform and sell goods and services to government organizations and PSUs in October 2020. The government compelled foreign firms using e-commerce platforms in India to obtain permanent account numbers in October 2020, modifying the equalisation levy regulations of 2016. (PAN). In the FY21 budget, it placed a 2% tax on the sale of products or the supply of services by a non-resident ecommerce operator. To encourage foreign firms to participate in E-commerce, the Indian government increased the FDI ceiling in E-commerce marketplace models to 100%. (in B2B models). The government's large investment in building a fiber network for 5G would assist India's ecommerce grow. The Journey Continues

The e-commerce business has had a direct influence on India's micro, small, and medium companies (MSME) by providing finance, technology, and training, as well as having a positive cascade effect on adjacent industries. The Indian e-commerce sector has been on an increasing trend, and by 2034, it is anticipated to surpass the United States to become the world's second biggest e-commerce market. Digital payments, hyper-local logistics, analytics-driven consumer interaction, and digital ads are examples of technology-enabled developments that will likely help the sector's growth. In the long run, the expansion of the e-commerce sector will create employment, improve export earnings, enhance tax collection by ex-chequers, and give better products and services to customers. By 2022, smartphone usage is anticipated to increase by 84 percent, reaching 859 million. The e-retail market is anticipated to keep growing at a rapid pace, with a CAGR of more than 35% expected to reach Rs. 1.8 trillion (US$ 25.75 billion) in FY20. The Indian e-retail business is expected to grow to 300-350 million customers in the next five years, bringing the online Gross Merchandise Value (GMV) to US$ 100-120 billion by 2025. According to a research by Bain & Company, India's social commerce gross merchandise value (GMV) in 2020 will be US$ 2 billion. Due to increased mobile usage, it is anticipated to reach US$ 20 billion by 2025, with a possibly massive growth to US$ 70 billion by 2030.

Q.2 Discuss the various business model in the E-Commerce sector Answer: MARKET PLACE MODEL The principles and standards of the zero-inventory model are followed by a genuine ecommerce platform. Some well-known examples are Naaptol, eBay, and Shop clues. The ecommerce marketplace becomes a digital platform for buyers and merchants without keeping the products. Marketplaces may assist merchants with shipment, delivery, and payment by collaborating with a restricted number of logistics providers and financial institutions. When an e-commerce business supports a dealer to create a store, exhibit products, manage stock, and fulfil orders directly to customers, the marketplace model is employed. On orders, the platform facilitator (the e-commerce business) charges merchants a commission (ranging from 5 percent to 30 percent depending on the class and category).

Well-known e-commerce firms such as Amazon, Flipkart, and Snapdeal employ the marketplace idea. Pros: Extensible, diversified product offering, huge seller base Cons: Harder, and transportation costs are higher. It is tough to gain consumer confidence and loyalty. Online businesses, where online customers choose things from a catalogue of products maintained by the online shopping business or shopping website, manage the complete process from beginning to end, from product purchase through warehousing to product shipment. Some examples are Jabong, Yepme, and LatestOne.com. When an e-commerce business retains its distribution centre to store items and transport orders straight to consumers' homes, this is referred to as warehouse display or inventoryled. Initially, Flipkart's operations were built on a warehouse model, with WS Retail playing a significant role. They ultimately embraced the marketplace strategy in order to broaden and diversify their offerings. Pros: Advantages include improved quality control, faster delivery, and the greatest customer experience and trust. Cons: Scaling is tough (but not impossible), fixed expenditures are significant, and cash flow is constrained. The inventory model was created with the e-commerce sector in mind. Due to existing FDI regulations in India, Flipkart and Amazon are adopting a hybrid strategy in which they operate as marketplaces while simultaneously owning stakes in major suppliers on their platforms. This technique is viewed as a “beyond all doubt” road to profitability since it takes less money. It also provides an appropriate amount of control over the customer experience.

MARKETPLACE SELLER OPINIONS VS INVENTORY-LED Because they require substantial and coordinated liquidity on both the buyer and seller sides, marketplaces are difficult to develop. These organisations demonstrate substantial system impacts after sufficient liquidity has been built up and the 'flywheel' is turning (the fact is that a market that has the most purchasers will attract more dealers, and the expanding base of vendors will, in turn, draw in more purchasers). As a result, once a market becomes efficient and dominating, it develops fast and exhibits "winner take all" characteristics regularly. Markets may also expand fast since they are basically technological platforms that give tools for buyers and sellers to interact as well as a secure environment that fosters transactions and price discovery. Markets may also expand fast since they are basically technological platforms that give tools for buyers and sellers to interact as well as a secure environment that fosters transactions

and price discovery. You will be able to: I have total transparency and visibility into your stock level, (ii) know where the product is physically situated, and (iii) control the picking, packing, and shipping process if you have complete control over the goods, providing your systems and procedures are sound. This implies you're less likely to accept an order if you don't have the products on hand. It also suggests that you might be able to cut down on shipping time. Being in charge of the goods allows you to deliver products more quickly and accurately, as well as answer to customer queries regarding delivery and shipment status more quickly.

Other traditional models are:     

B2B B2C C2C D2C B2C2C

Q-3 Will you like to invest in this company .Justify your answer giving case facts?

Yes, because the Indian e-commerce market is expected to grow to $200 billion by 2026, up from $38.5 billion in 2017. Much of the industry's growth has been spurred by increased internet and smartphone adoption. The number of internet connections in India is expected to increase dramatically to 776.45 million by September 2020, indicating that the e commerce sector in India is increasing and Flipkart, as a big market leader, will be a solid investment. One of the most major concerns with Flipkart is that it is a loss-making company as a result of pricing battles with competitors, heavy advertising and marketing investments, and a massive amount of slow-moving merchandise. Flipkart, for example, recorded consolidated sales of INR 43615 Cr in FY19, a 42 percent rise year on year. At the same time, their losses decreased by 63% year on year to INR 17231 Cr. Despite the fact that the number of clients and ecommerce sales in India's ecommerce sector is increasing, it is commonly accepted that firms continue to lose money. Ecommerce enterprises must engage extensively in customer acquisition because the Indian market is dominated by discount-driven sales. Flipkart, on the other hand, declared a revenue of Rs 34,610 crore for the fiscal year 201920, a 12% rise over the previous year, in 2020. The company's net loss for the fiscal year, at Rs 3,150 crore, was down 18% from the previous year. The Covid-19 pandemic has accelerated the trend to e-commerce, with an increasing number of consumers regularly

shopping online. In 2020, Flipkart, for example, saw record-breaking festive-season sales. Big Billion Days, Flipkart's flagship holiday sale, surged by at least 40% year on year, and the number of monthly active customers on these platforms reached an all-time high. As ecommerce retailing expands in India, so does the company's potential for future growth....