Flipkart – Initial Challenges for e-Commerce / Online Selling – How did they Overcome ?

We are all fully aware that Indians do not buy much online due to trust issues regarding fulfillment of transaction, quality of goods & services delivered and secure payment methods for the transaction to complete.

In 2010, Flipkart started offering cash on delivery which became a huge success as much as 50% of its sales were from cash on delivery operation. Another key success factor has also been its migration from consignment model to warehousing model that ensures better consumer experience (80% of all deliveries today are from warehouse).

Logistics of Flipkart: It employs over 4,500 with majority of them (>2,500, in our view) in blue collared jobs i.e., into warehouse management and logistics and the balance in customer support and technology. In the same year it expanded into other segments and started offering DVDs, mobiles, games, electronics and cameras, and a host of other products. It has tied up with 3,000 distributors across seven cities. However, books continue to dominate the overall sales with 50% share. The company also ships 1,000 items every day through government courier to rural villages which do not have courier facilities.

Flipkart Financials: It posted revenue of INR25mn in FY09, which increased to INR250mn FY10 and by end of FY11 it hit revenue of INR750mn. Management and industry sources say that for FY12 it is targeting INR5‐6bn revenue. It is said to be clocking USD10mn sales per month.

Flipkart Merchandise Offerings: It offers over 11.5 mn book titles, has over 2mn registered users and
sells 30,000 items per day. It has over 2mn registered users. More than 50% of the orders are from metro cities.

Finally, the mantra for success in e-commerce is Get Big Fast with Relentless focus on customer service. What say ?