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ATII

An Operations Management Perspective


By Group 3 :
Aseem Rohatgi
-010
Dheer Vora
-015
Karanvir Sidana
-025
Purbashish Ganguly -046
Siddhi Aggarwal
-067
Spreha Kanika
-069

E-COMMERCE & E-RETAIL IN INDIA


In 2013, e-commerce market in India estimated at USD 16 billion,
grew at 88% CAGR from 2012, set to grow to USD 56 billion by 2023.
Currently there are 243 million active internet users.

In 2006, e-commerce market stood at USD 1.75 billion and there


were only 21 million active internet users.
Flipkart founded in 2007 by two ex-Amazon employees.

Became a game changer in e-retail, pioneered the COD concept and


introduced 30 day return policy.
Initially an online book store, today it has more than 15 million
products across 70 product categories.
Started with an initial investment of Rs.4 lakhs, present valuation is
somewhere between USD 5-7 billion.
E-commerce &
E-retail

FlipkartOverview

Order
Processing

Warehousing

Inventory and
Supplier
Management

Logistics and
SWOT

The Way
Forward

COMPANY OVERVIEW
Company Structure

Mothership - Flipkart Pvt Limited (FPL), registered in Singapore. FPL owns 3 other
Singapore listed entities :
Flipkart Marketplace Ltd (FML).
Flipkart Payments Pvt Ltd (FPPL).
Flipkart Logistics Ltd (FLL).
Currently, WS-Retail operating as a vendor on marketplace.
Flipkart currently has 13,000 employees on its payroll.
Ships 50 lakhs shipment every month equivalent to 2 orders per second.
March 2014, hits an annual revenue rate of USD 1 billion in Gross Merchandise Value
(GMV).
Became the first e-commerce company globally to raise USD 1 billion in a single round of
funding.

Raised $10 M

Raised $1 M

Acquired WeRead

Raised $20 M

Acquired
LetsBuy for
$ 20 M

Acquired Chakpak.com

Product &
Technology

Business
Development

Operations

Website
Management

Vendor
Management

Procurement
Warehouse

ERP System

Sales
Management

Inventory
Management

Pricing
Strategies

Logistics
Customer
Support

Acquired $
150 M

Acquired
Myntra
for $ 330
M

Raised $ 160 M

$1 B sales
Raised $1
billion

App

2007

2009

2010

2010

2010

E-commerce &
E-retail

2010

2011

2011

FlipkartOverview

2011

2011

Order
Processing

2011

2011

2011

2012

Warehousing

2012

2012

2012

Inventory and
Supplier
Management

2013

2013

2013

Logistics and
SWOT

2014

2014

The Way
Forward

2014

ORDER PROCESSING & FULFILMENT PROCESS

Proprietary ERP systems to process orders.


Typical orders starts with customer searching & selecting
across the categories.
Thereby, it takes on an average, 8-10 clicks for placing the
order.
User directed to Payzippy, Flipkart's own payment gateway.
Order downloaded from the web-store (front-end) to Order
Management System (OMS) (back-end).

If supplier from Marketplace, it is mandatory for him to


use eKart for shipping.
In case large orders guaranteed by a seller, Flipkarts provides its
own packaging.

Once seller completes 1 month with 30 monthly transaction, it is


upgraded to tier-I seller status.
Payment cycle for tier-1 suppliers is Dispatch Date + 7 Days

For tier-II sellers it is Dispatch Date + 12 Days


E-commerce &
E-retail

FlipkartOverview

Order
Processing

Warehousing

Inventory and
Supplier
Management

Logistics and
SWOT

The Way
Forward

WAREHOUSING

7 major warehouses across country in Delhi,


Noida, Mumbai, Pune, Chennai, Bangalore &
Calcutta.
5000 regional distribution centres across tier-I
& tier-II cities.
Major part of USD 1 billion will go in settingup/leasing of new warehouses in tier-I & tierII cities.

Own Warehouse Management System


(WMS), which has 3 major segments:
1. Inward Processing.
2. Storage Management.
3. Outward Processing.
All scans during inward processing done
manually, plans to automate this using
robotics.

E-commerce &
E-retail

FlipkartOverview

Order
Processing

Warehousing

Inventory and
Supplier
Management

Logistics and
SWOT

The Way
Forward

INVENTORY AND SUPPLIER MANAGEMENT


Procurement

Holts forecasting method

Long Tail Concept

QlikView

Inventory (75%) : fast selling


JIT (25%): Expensive items
with unpredictable demand
Procurement Teams- Central
and Regional

Re-order point
Historic trends seasonality
not included
FIFO system discourages
obsolete inventory

Procurement from vendors


Selling large number of
unique items with relatively
small quantities
Ad-hoc basis

Tool to optimize stock level


and reduce costs
Complex Data Analytics
Inventory Utilization
improved by 5%

Marketplace Model
Adopted in Apr13 due to FDI
restraints
Flipkart acts as interface - does not
hold inventory
Orders are placed directly on
suppliers and delivered by Ekart
logistics and other partners
E-commerce &
E-retail

FlipkartOverview

Method of supplier selection-Starting out small and scaling up demand generation

Better deals from wholesalers and manufacturers. E.g. MotoG, Xiomi, Book Publisher

Grading of suppliers on performance A,B,C

Credit lines and discount terms

Quality Check contract

Percentage of returns accepted

Order
Processing

Warehousing

Inventory and
Supplier
Management

Logistics and
SWOT

The Way
Forward

LOGISTICS | SWOT ANALYSIS

Shipments per month 5 million


Companys logistic arm- eKart Logistics and other 3PL
Cash On Delivery (COD) ~90%
Hub and Spoke model to optimise logistical expenses 7
mother hubs Bangalore, Kolkata, Delhi,Noida Chennai,
Mumbai,Pune.
Delivery time 3 days(local) to 3 weeks (international)
Same Day Delivery introduced in Dec13 in 10 cities (Rs 140/-)
REVERSE LOGISTCS: 30 day return policy
2.6% returns logistic costs borne by flipkart
Followed by replacement, store credit, actual cash-back
E-commerce &
E-retail

FlipkartOverview

Order
Processing

STRENGTHS
Strong Brand value
Own Logistics Arm
eKart- reliable
Own Online payment
gateway - Payzippy
Own Marketplace
model

WEAKNESSES
Investor driven
organization - lack of
Independent board
Excessive focus on
expanding customer
base rather than pulling
profits

OPPORTUNITIES
Online fashion and
apparel business
Providing logistics
services to its
competitors.
Growth in online retail
sector in India

THREATS
Competitors like
Amazon, Snapdeal,
Infibeam, Indiaplaza,
Homeshop18 etc
FDI in B2C retail
Creative accounting
allegations

Warehousing

Inventory and
Supplier
Management

Logistics and
SWOT

The Way
Forward

THE WAY FORWARD


Online Shopping is projected to reach $56 billion by 2023 i.e. 6.5% of total retail market
Flipkart will continue to leverage online advantages to
offer equal or better selection range and price than competitors
ensure high quality service through consistent stocking
reliable delivery and responsiveness to customer inquiries
personalization of offerings

Growth will ride on: Internet penetration in tier 2 cities and


villages
Change in shopping habits of 25-32 age
group

Mobile Apps and


Website

Technological
Innovations

Focus on smaller
towns

Innovative
Logistics

Brand
Consolidation

Personalized
Catalogue

A more efficient
and use friendly
mobile app
More interactive
website

Crucial to stay in
the highly
competitive
market
e.g. eBay s
virtual window
shop

In-sync with
mobile
penetrations
Make brands
available in
smaller towns
and villages

Reinvent
logistics esp
rural distribution
e.g. Amazons
patent for
Anticipatory
Delivery Model

Better synergies
More
commanding
position to
suppliers, Govt
lobbying

Further optimize
user profiles
through dynamic
programming
and analytics
Personalization
through AI

E-commerce &
E-retail

FlipkartOverview

Order
Processing

Warehousing

Inventory and
Supplier
Management

Logistics and
SWOT

The Way
Forward

THANK YOU