Flipkart is Indias biggest E-Commerce Retailer and has presence across various

categories carrying a wide assortment of products. More details are available online
at flipkart.com
You are part of the business planning team for the Year 2015 -16 and are faced with
multiple challenges for this year. One of the scenarios that you need to plan for is the
next Big billion day slated to be sometime around Diwali of 2015. The Big Billion day
is a one day only sale that attracts consumers across India wherein there is deep
discounting across all categories leading to huge sales spikes. However, for the
purpose of this exercise, you may assume that Flipkart operates only in 3 categories
which are Mobiles, Fashion and Books.
As you sit in the beginning of 2015, you have already built capacity for 2014 volumes
across all supply chain legs and can comfortably meet those demand numbers.
From our past experience, we expect that traffic will spike 10X and demand will spike
3X during any one day sale that we run. We have seen historically that shipments
travel between zones to reach the customer thereby increasing time to delivery and
hence delivery cost. As Diwali is also the peak festive season for all companies in
India, supply chain resources are scarce and we would need to work to understand
how much capacity is needed for air movements between Zones. All products may
not be available in all zones due to various reasons like presence of supply clusters,
tax laws etc There will be mismatch between demand and inventory placement
causing a lot of inefficient supply chain movement between zones. From a customer
perspective, Flipkart has always been the pioneer in fast deliveries and is known for
its prompt customer service. Delivery times for local orders (inter-zone) are between
2 and 3 days and for intra zone orders, Flipkart takes 3-5 days depending on
location. During peak sale periods, customers may accept deliveries up to a week,
but any delivery later than that will mean loss of trust and could result in order
cancellations. Please also note that on Sundays, our delivery network works at 30%
capacity. The share of third party sellers usually is about 10%, and this can go upto
15% during the Big Billion Day.

Table 1: Average Units dispatched in a Month
Avg Units dispatched/Month
Category
Mobiles
Fashion
Books

2012

2013

2014

2015 (f/c)

2016 (f/c)

10,000

80,000

4,00,000

15,00,000

45,00,000

40,000

5,00,000

20,00,000

50,00,000

50,000

2,00,000

10,00,000

20,00,000

20,00,000

Table 2: Other Information

Category

Avg Returns (% of

Avg Selling

Avg Product

Orders Shipped)

Price (In Rs.)

Weight (In Kg)

Mobiles

3%

7,800

0.60

Fashion

15%

1,100

1.00

Books

7%

450

0.25

Table 3: Zone Wise Details

Category

Mobiles

Fashion

Books

Zone

Demand Split

Inventory Split

North

28%

25%

East

14%

5%

West

23%

20%

South

35%

50%

North

48%

37%

East

18%

2%

West

17%

7%

South

17%

54%

North

25%

60%

East

20%

5%

West

15%

15%

South

40%

20%

Table 4: Costs
Line Haul Costs
(Rs/Kg)
South
North
West
East

South
North
West
East
25
55
40
50
55
31
42
45
40
42
27
60
50

45

60

38

Table 3: Supply Chain Assets productivity

Asset
Warehouse Space
Warehouse Cost - North
Warehouse Cost - South
Warehouse Cost - West
Warehouse Cost - East
Delivery Hub

UOM
Units/Sqft
Rs/Sqft
Rs/Sqft
Rs/Sqft
Rs/Sqft
Items Delivered/Day/Person

Data
10
50
55
80
45
35

What are the various challenges that the supply chain will face in order to fulfil
demand of the Big Billion Day. How will you plan to overcome these challenges?
Please consider all aspects of supply chain from procurement till customer delivery,
which needs to be well prepared for peak demand. Some of the major issues could
be building for peak capacity from a storage perspective and related costs
considering underutilization, and maintaining an acceptable level of customer service
Please provide a holistic strategy plan along with various assumptions and
supporting analysis to substantiate your strategy.
Flipkart has an in house logistics arm which does deliveries to customers. Flipkart
also works with third party logistics providers to assist in deliveries in some locations.
For example, a city like Mumbai can be serviced by both in house team and third
party provider depending on various factors. Flipkart is aiming to expand services to
Tier 3 and below towns, from which the next growth wave is expected to come. The
current delivery model is not optimal to expand into these towns as the deliveries /
sq.km density will significantly reduce and add to cost. You are tasked with coming
up with alternate models of delivery to reach Tier 3 towns and below. Please present
a financial business case for the model you choose to go with. Make relevant
assumptions and call them out clearly in your solution.