Flipkart Looks to Refresh Strategy as Rival Closes in
Flipkart, chalked out a strategy amidst an ongoing battle to ward off competition from fast growing rival Amazon.
India’s largest e-commerce company, Flipkart, chalked out a strategy amidst an ongoing battle to ward off competition from fast-growing rival Amazon.
In a townhall meeting on August 19, Flipkart’s chief executive officer Binny Bansal presented the company’s overall goals for the next few month. Binny presented a strength, weaknesses, opportunities and threats (SWOT) analysis, before he was cut short by chairman Sachin Bansal for a surprise admittance about the company’s recent underperformance.
Fighting for Survival
According to a report by technology news website FactorDaily, Binny highlighted two major threats to Flipkart in his analysis:
1. Amazon which, thanks to its deep pockets, could siphon Flipkart’s loyal customers.
2. Mobile wallet player Paytm, which has established its brand perception as a payments company.
These ‘threats’ look to target Flipkart’s weaker areas, which according to Binny’s analysis are customer experience, culture, and speed and quality of execution.
While emphasising Flipkart’s large customer base, top-brass talent, good brand recall, strong supply chain and balance sheet as its strengths, Binny said there are opportunities to improve customer experience, selection and availability of products, its logistics unit eKart and payments.
Responding to a question on why Flipkart couldn’t capitalise on Snapdeal’s lost market share, Binny admitted that their customer experience “sucked”, delivery was slower, and selection wasn’t great.
If we do that (improve customer experience), there is no way any competitor can stop usBinny Bansal, CEO, Flipkart at the townhall meeting
The gap between Flipkart and Amazon has diminished, with the latter grabbing most of Snapdeal’s lost market share. Amazon has now grown its share to 35 percent from 29 percent in the quarter ended June 2016, according to Flipkart’s estimates.
Stagnant Industry
A flat growth in the e-commerce space has added to Flipkart’s ongoing woes. According to FactorDaily, around 26 million units were shipped by all online retailers combined in the April-June quarter. This figure was nearly same as the number of units shipped in the previous two quarters combined.
The market hasn’t grown and that’s way more concerning than how we are doing against Amazon.Binny Bansal, CEO, Flipkart at the townhall meeting
Recovery Underway?
Binny, however, pointed towards a recovery as he said that Flipkart’s gross profit margin improved by 400 basis points in the first quarter. Myntra is among the operationally profitable units of Flipkart, he said, adding that the company was well capitalised and sufficiently funded for the next three years.
Myntra’s acquisition of fashion retailer Jabong in this quarter amped up Flipkart’s market share in fashion retailing to 65 percent, according to Binny.
Among other wins for the company in the quarter, were the exclusive phone sales deals that they got back from Amazon. Brands like Motorola and Xiaomi had shifted their exclusive phone launches away from Flipkart to Amazon.
New Innovations
Growth would return only with innovations.Binny Bansal, CEO, Flipkart at the townhall meeting
Flipkart, Binny said, has planned to push forward two new innovations to their consumers in the coming weeks - zero percent EMIs and Flipkart Assured, a programme which offers guaranteed quicker deliveries.
Flipkart is also planning a major entry into the payments business by rolling out their PhonePe app in a month. The app allows users to send, receive and request money with ease and is built on top of the Government’s Unified Payments Interface.
