Increasing internet (and importantly smartphone) penetration and growing trust in online payments are two primary growth drivers for huge ecommerce growth in India since 2010. According to ASSOCHAM report, India’s e-commerce grew from $23B in 2015 to $38B in 2016, a massive 67% growth. The number of online shoppers are expected to increase from 50M in 2015 to 320M in 2020 with overall online retail market reaching $100B. So the market is huge enough to easily accommodate multiple big players.
There are reports that Amazon dislodged Snapdeal to become the second largest online marketplace, trailing behind Flipkart which is also struggling to retain its market share. I would prefer to see both Flipkart and Amazon flourish in future, maintain sector balance, and compete with each other to deliver a great buying experience for end customers like me. Flipkart has already lost around 30%+ of its valuation in 2016, which means that it would struggle with raising capital from its current and new investors at desired valuation. But Flipkart has potential to retain its market position against Amazon and regain investors’ support if it focusses on these three aspects.
a) Build a TRUE Customer-First Culture: Jeff Bezos considers VERY high standards of customer service as the differentiating factor to build trust in ecommerce business. There are striking differences between the customer service standards of Flipkart and Amazon. Flipkart customers’ bad experiences with its customer service and delivery problems are all over the web, and these might influence millions of prospective customers to question faith on the business. Honestly if you are managing complex logistics processes for online marketplace, such instances (missed deliveries, wrong items, and unfulfilled orders) would certainly happen. But what really matters is how transparent and effective you are in providing the updates to the customers so that they are not waiting till the last moment and then feel disappointed if suggested delivery period is missed.
b) Focus on Millennials and Invest in social shopping capabilities: This idea stems from millennials’ desire for personalization and social engagement in their buying experience. Customers from different walks of life in general are more sensitive to recommendations and feedback provided by their close friends. By tying product reviews back to friends and family, social shopping platform would instill trust and add credibility and pertinence to reviews. This would directly influence millennials (and indirectly their older family members) to spend more on Flipkart’s platform. Millennials’ purchasing decisions and trust in brand are also greatly determined by social influencers (which are not essentially Bollywood celebrities and cricketers). These social influencers can be bloggers, vloggers, stylists, and writers. Flipkart launched “Flipkart Ping”, an invite-only feature, in August 2015 but discontinued it within an year for it failed to bring 'social' into 'shopping.'
c) Making BANSALs more prominent in marketing programs: Flipkart is essentially not an Indian firm (as it is registered in Singapore) so “swadeshi” campaign would not work for it, but Flipkart’s founders belong to that super-successful Indian class with whom most of Indians can relate to. Bansal(s) are true inspiration for Indians, similar to what Bezos and Zuckerberg are for Americans. Bezos’ and Zuckerberg’s personalities, inspirational stories, political stands, focus on innovation, philanthropic activities and their media presence have also bolstered customers’ faith in their firms. When customers respect brand ambassadors associated with a business, they tend to overlook minor glitches. Flipkart needs to focus on incorporating its successful founders in its marketing campaigns and also make investments in other innovative Indian startups and social entrepreneurs to boost its image amongst customers. How the marketplace successfully helped small businesses should also be shared. #GrowWithFlipkart (with just seven videos since Jan 2015) was a good starting point but it seems management has since dumped that idea. The published stories were anyway ineffective.
Flipkart has to also improve product discoverability, focus on building strong m-commerce capabilities, invest in machine learning to enhance forecasting & supply chain solutions, and deliver innovative solutions for last-mile delivery.
I wrote a post a month back on how Flipkart can improve its user experience and have seen positive changes with respect to the points mentioned in it. I would give my best wishes to Flipkart and its adept team to truly reclaim the glory so that all these learnings can be bequeathed to other startups down the line.