Flipkart is a big name in the e-commerce world and gave a whole new outlook on online shopping. It is undoubtedly one of the most trusted online shopping platforms that we have in India and is serving its customers with loyalty for years.
Where online shopping has been made easier than ever before, the markets also did a pretty impressive growth. Nowadays e-commerce platforms are really flourishing and provide great market potential.
Coming back to Flipkart, the e-commerce giant has proved itself to be India’s one of the fastest and most valuable startups. The growth and success made by the company in its lifetime can not be overlooked.
Despite having some tough competitions in the market, Flipkart managed to attract a whole lot of customers with its quality service, effective business model and marketing strategies.
The article below constitutes the whole business model of Flipkart. It will help you understand everything related to the company where it is the value propositions, customer relationships, target audience, revenue streams, etc.
- 1 Understanding Flipkart Business Model:
- 1.1 1. Company Information
- 1.2 2. Major Partnership Involved
- 1.3 3. Major Activities
- 1.4 4. Target Audience
- 1.5 5. Selling Point
- 1.5.1 1. Products are launched exclusively
- 1.5.2 2. Good Price with trust
- 1.5.3 3. Wide Selection of products
- 1.5.4 4. Convenience
- 1.5.5 5. Other features
- 1.5.6 6. Customer Care and Relationships
- 1.5.7 7. Mediums for reaching the target audience
- 1.5.8 8. Major Resources of Flipkart
- 1.5.9 9. Money Management
- 1.5.10 10. Channels for the revenue stream
- 2 Conclusion
Understanding Flipkart Business Model:
1. Company Information
The foundation of Flipkart was done by two IIT Delhi grads named Sachin Bansal and Binny Bansal, who were at the time working Amazon, which is another e-commerce giant worldwide. In the year 2007, they had an idea to start an online bookstore named Flipkart and that’s how the journey of India’s most valuable startup started.
The company is now a subsidiary of Walmart. Walmart acquired Flipkart for a whopping $16 bn deal. The main headquarters of the company is in Bangalore, India. Flipkart’s current CEO is Kalyan Krishnamurthy who has been in power since 2017.
There is a total of 30,000 employees in Flipkart who work day and night to serve their customers. As of 2019, the estimated valuation of the company is $22 bn, and the total revenue of Flipkart as of March 2018 is $3.8 billion.
The e-commerce platform sells all kinds of products from electronics to books, fashion, kitchenware, beauty, and other lifestyle products.
2. Major Partnership Involved
Flipkart has involved various key partners with the company for the growth and expansion of the company. The partnership has provided the company with the required assistance in the branding phase. The different key sources of partnership for the company are known in their own field and make a really strong partner.
First, let’s talk about Walmart, Walmart has now acquired Flipkart for $16 billion in May 2018. The company owns 81.3% of Flipkart now. Walmart is already a big name in itself, it is a multinational retail company that has supermarket stores, departmental stores, grocery stores, etc. in different parts of America.
Subsidiaries: Flipkart has also bought some subsidiaries that helped the company in the required expansion of its business. By adding subsidiaries like Myntra, PhonePe, eBay, Jabong, Ekart, LetsBuy, the company has not only widened the range of its products but it also helped Flipkart in generating higher revenue.
The company is also partnered with various publishers and authors in order to provide readers with ebooks. As mentioned before, the company was originally founded to be an ebook store so it provides various options to the readers to purchase all sorts of ebooks.
3. Major Activities
Flipkart is undoubtedly a bigger name in the market and holds a great financial value. But it took time, patience and hard work to make the company what it is now. There are various activities that take part in order to provide the customers with the kind of experience that they wish to have.
The company’s website is continuously optimized and updated for the user experience. The developers and designers at Flipkart are keen on providing you with excellence and comfort. Apart from this, with the same enthusiasm, the company manages other sectors for the same purpose.
Be it the warehouse at Flipkart or transportation facilities or any other sector, the company has great managing skills so that the customers do not face any inconvenience with the company.
The wide selection of products and their catalogs are maintained and updated, as well as the seller network too, is built to expand the business.
Flipkart is no less in marketing and promotions. As we can see the company tries its best to bring out special offers and sales, as well as they are pretty active on social media, etc. The strategic planning in the marketing area has helped the company target its audience effectively during the festive season.
Lastly, the customer cares support of Flipkart is pretty reliable too. It provides 24-hour support via phone call, online chatting or even email.
4. Target Audience
Every company has its target audience that they know will generate a higher number of potential customers and so did Flipkart. ‘Online shopping lovers’ is a broader concept, that needs to break into different audience groups that are targeted individually.
Through various promotions, discounts, coupons, sales, Flipkart catches the eye of the discount lovers. There are various customers who love discounted sales, as well as the company tries to engage its prior customers by rewarding them with points that could be used as a discount.
It stores a wide selection of products for people of different age groups and interests. In order to reach the audience in an effective manner, the company has made easy accessibility and convenience in the buying process.
The audience is also reached on the basis of the products that they selected before. It’s called marketing strategies that are carried out with the help of social media marketing.
5. Selling Point
1. Products are launched exclusively
Whether it is newly launched gadgets, electronic products, fashion range, latest fashion home decor and furniture, clothes of kids, etc. all of these are brought exclusively to the products.
Especially the gadgets are listed as soon as they release so the customers will be able to buy the latest products.
2. Good Price with trust
Flipkart is built on customer’s trust over the years, the company as provided its audience with the loyalty that they seek as well as the prices offered by the company are pretty affordable too.
The company also features the option where you get to compare the prices of the same product offered by different sellers so that you can choose the best.
The transparent policy and maintained trust over the years have helped the company in building its credibility.
3. Wide Selection of products
There are about a million products at Flipkart that customers can choose from as per their choice and preference. You can literally just find any kind of product on the website. On special holidays or festive season, they also launch some products exclusively for the users.
It features products from different sellers and you can compare and buy the products as per your choice. Apart from this, you will also get the see the picture catalog of products, their detailed description, specifications, and all these are accommodated with filters for a customized search.
Flipkart has sort of played a great role in making our country stand out in the e-commerce field. Before the launch of this company, we had only foreign-based countries’ websites to shop from but with the launch of Flipkart, now the Indian market has done some significant progress.
5. Other features
Apart from all these, there are various other options provided by the company like anyone could become a seller at Flipkart as well as you can take the opportunity to become an advertiser at Flipkart too.
6. Customer Care and Relationships
Since its launch in the year 2007, the company has focused majorly on building customer relationships. It has made available different kinds of products available to the doors of the customers that too at a pretty reasonable price. The trust and loyalty on which the company has expanded itself are one of the important factors that we seek for in our e-commerce platform.
The reliability of the products is accommodated by different customer reviews. Also, the company provides pretty good customer support that is available 24/7 for the convenience of the users.
7. Mediums for reaching the target audience
With the advancement and development in the field of digital marketing and different e-commerce platforms, the products are easily made available to the audience. Through audience targeting now the online shopping platforms are having the better reach to the customers.
Digital marketing and online shopping platforms have combined to provide customers with the best results in their shopping experience. There are various channels used by Flipkart to target its audience, such as:
Website- The main source for reaching the audience is the Website. This is where all the company’s products are listed and sellers can also use this channel for their advantage.
Affiliation programs- Affiliation programs are for everyone, where people can become an affiliate at the company and earn commissions by promoting their products.
Software Applications- Flipkart provides the customer with different platforms for customers and sellers, such as Flipkart online shopping application is for the customers to buy the products, and Flipkart Seller Hub is for the sellers that helps them in the listing of their products.
Social Media Platforms- Social Media is nowadays an emerging source of marketing and reaching the audience. Flipkart has taken its business to all the effective social media platforms such as Facebook, LinkedIn, Instagram, Youtube, Twitter, Google Plus.
Through all these social media platforms Flipkart promotes its business by writing promotional content, blogs, running advertisements, etc.
8. Major Resources of Flipkart
In this section, we will discuss about the major funding resources of Flipkart. Through the following resources, the company finances its operations. The following is a bunch of investors in the company through which the company has managed to grow and expand.
A. Venture Capitalist Partners– The venture capitalists are investors with high funding. Following are the venture capitalist at Flipkart:
- Tiger Global
- Accel India
- ICONIQ Capital
- Japan’s Soft Bank
- MIH ( Naspers group sector)
B. High Amount of Customers Visiting Flipkart every day– You will be surprised to know that every day about 100 million visitors, visit the website of Flipkart. As the number of visitors increases on the company’s website, the probability of turning potential customers into true customers increases.
C. Payment Modes- There are various modes of payment provided by the company to suit the customers. The customers can select the choice of their payment mode accordingly from the following:
1. Cash On Delivery: The cash on delivery mode works when the customer pays in cash to the delivery person when his or her order arrives. Although there is one condition that the amount of your order should not exceed 50,000 INR in order to avail Cash on Delivery Option.
2. Debit Card and Credit Card- These are advance payment modes where you will have to link your card in order to pay during the order proceeding.
3. Net Banking- This option lets you link your Flipkart account with your bank account to process payments.
D. Smartbuy by Flipkart– Flipkart has an option for their loyal customers where they can buy from Smartbuy. It is basically a private label by the company that makes all the products available at affordable prices.
E. Sachin Bansal– Sachin Bansal owns 6% shares of the company, he used to work with Amazon previously before starting his own company. He is interested in investing in emerging business opportunities.
F. Binny Bansal– Binny Bansal owns 5% shares of the company, however, he is not working with the company anymore, the reason behind this is the raised allegations by Walmart that owns 81.3% of Flipkart.
G. Kalyan Krishnamurthy– Kalyan Krishnamurthy who is the current CEO of the company has been in power since 2017. He handles all the operations being done in the company and he recently also announced that Flipkart now needs more executives to run its business.
9. Money Management
Following are the operations or things in Flipkart that need cash flow to work properly:
1. Website Maintenance- The website needs money support from time to time to keep itself updated and customize for the customers’ convenience.
2. Advertisements- Flipkart runs various ads on social media platforms like Facebook, Instagram, Youtube, as well as on search engines like Google, these ads need cost support to run.
3. Warehouse Management- Warehouse is where the products are kept and obviously after knowing the wide range of products by the company we can assume the area of the warehouse. After receiving the order the product goes directly from the warehouse to the transportation facility.
4. Employees’ Salaries- There are various employees in the company working in different sectors, as estimated, the average monthly salary of employees at Flipkart is 70,000 per month. And in total 30,000 employees at Flipkart bags the salary of $30 million.
10. Channels for the revenue stream
There are numerous mediums through which the company accumulates its revenue. The company allows various local, national and international sellers to list their products on the website. This way the products and the sellers get more exposure and the company gets more revenue.
The company has some percentage of commission on each product sold. The commission structure is not fixed but it varies from product to product, for local and non branded products that do not provide high margin, the commission is 2% to 5% and for high margin providing branded products, the commission rate of 10% to 25%.
Flipkart does its own deliveries and does not take help from other third-party logistics companies. In this way, the company also saves a good amount of money on shipping. It cost customers 50 INR to ship the products for the orders that are less than 500 INR worth.
Flipkart definitely has a very effective business model that helped the company compete with various e-commerce giants such as Amazon, Alibaba, etc. Flipkart was started in India and it has become popular in a short amount of time. The growth and potential showed by the company are absolutely impressive.
The company is still growing continuously and has never failed to live up to customers’ expectations. With its reliable service and good quality products, Flipkart is a preferred e-commerce platform in the country.
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