Flipkart has created an efficient e-tail model suited to India. Its in-house delivery system ensures in-time delivery all over the country
Online retail giant Amazon might well be the idol, but Flipkart has been innovative in creating an efficient e-tail model suited to India.
Flipkart, easily India’s largest e-tailer, is expected to close 2011-12 with about Rs 550 crore in revenues. After its acquisition of Letsbuy, a strong cyber player in the consumer electronics category, the firm’s revenue is expected to touch around Rs 700 crore.
Like Amazon, Flipkart too has invested heavily in setting up warehouses — the company has eight warehouses. But unlike Amazon, Flipkart has an in-house delivery system, for which it has a dedicated team of over 1,500 people.
In turn this has allowed the founders, Sachin Bansal and Binny Bansal, to focus on one of the most important aspect of e-tailing, delivery on time. Rather, Sachin Bansal says, “We are looking at making bigger investments in our supply chain and technology. This should result in larger warehouses and increased automation of our processes.”
Although the company makes a profit per transaction, it is in the red at an operational level because investments are still being made in technology, the supply chain, logistics, customer support and marketing to scale up the business.
But that has not deterred the firm from having an in-house delivery system. This ensures that delivery happens within the promised time all over India. About 80-85 per cent of the delivery is done by the in-house delivery team, and the rest is taken care of by courier firms. Flipkart processes almost 30,000 orders daily.
This is in line with its focus on having huge warehouses. The company has close to 11.5 million titles and a majority of these titles are inventory bases, very few being procured on demand. Even in electronics the company has chosen to have an inventory. It’s just that the ratio of inventory may not be as big as its books category.
The other innovative approach that the company introduced was its 30-day replacement guarantee policy. Such schemes are popular with e-shoppers in markets like the United Sstates and Europe; they allow customers to test the product for a few days, and if there is a genuine problem with a product, companies takes it back.
Then again, cash on delivery (COD) had been part of the Indian online journey, but Flipkart brought it into focus in a big way. Today, almost 65 per cent of its sales are via COD. Within two months of the launch of COD, almost 30 per cent of its sales came from this segment. Like Amazon, Flipkart’s founders too do not share their success formula in customer service. But speak to any employee working in Flipkart and they will tell you that other than the warehouse and logistics system, the company is fanatical about customer service.
Any person joining Flipkart has to undergo one-to-two days of training in customer service, irrespective of their department or level. These employees spend time with the customer experience services team and learn how customer queries ought to be handled.
This also means that whoever gets a call from a customer — other than the customer services team — needs to know how to resolve tricky situations. Merely diverting the query to the customer service department is not an option. The company has therefore developed a tracking system that can be accessed across levels, which helps in resolving queries in an efficient manner. This is the precise aim of the team that handles the social media platform. Any query posted on Facebook or Twitter is tried and resolved on a real-time basis.
Flipkart is among the few e-tailers in India that has been able to marry the offline and online world together in its effort to get more shoppers to buy online. As Bansal says: “We believe e-commerce in India hasn’t reached a stage where players can indulge in share gain tactics. The market has to be built up by getting those shopping offline to go online.”
