Flipkart:Transitioning To Marketplace Model: Group 4

Flipkart:Transitioning to
marketplace model
Group 4
M079-20 Ashwin Rai
M145-20 Khushi Agarwal
M095-20 Mansi Pathak
D007-20 Richa Singh
M125-20 Stuti Agrawal
M187-20 Sneha Yadav
M175-20 Mohil Patel
Q1. What does it take to build an e - commerce
business in India?
Following is the process for building an e-commerce business in India
1) Decide on the business model -Decide which model one wants to go with, a single vendor marketplace
or multiple vendor marketplace.
2) Name your brand - the next step is to come up with the name for your brand. And decide the domain
name that you want to go with for your website.
3) Register your eCommerce business - Register your company.
4) Build your eCommerce website - Design your eCommerce website from scratch.
5) Payment gateways - Set up payment gateways for your online business, as it will allow the processing of
credit cards, debit cards, net banking, and cash card transactions through the eCommerce website.
6) Building a logistic System - This includes shipping an order to a customer or transporting an inventory to
a merchant and keeping track of the imported goods in transit.
7) Marketing - Market your company through various channels like SEO, promotion, targeting, advertising,
etc.
Q1. What does it take to build an e - commerce
business in India?
Major Issues faced while building a ecommerce business in India includes -
● COD is the preferred method of payment- COD reduces the flow of cash for the vendors
as it takes time to deliver a good to the customers
● Internet penetration is Low - Internet penetration is low in India as compared to some of

the western countries and there is lack of connectivity for people
● Offline method is preferred more - Indian customers prefer offline shopping much more
then online shopping as it enables them to physically see the product and check its quality
Q2. Is Flipkart’s decision to move to marketplace
model the right decision at this time?
•With huge potential of e-commerce in India ,Flipkart made the right decision to shift to marketplace model to cater to the
expanding demand from the consumer base
•Increase in penetration of internet, higher level of demand emanating from tier 2-3 cities, rising levels of urbanization with soaring
disposable income and growth of the consumer class presents huge market potential that can be served through marketplace
model with shorter turnaround time
•Hyper competitiveness in the e-commerce sector in India favours a shift to marketplace model as it would be a key strategy from
the perspective of achieving faster growth, acquiring market share and maintaining sustainable growth model
•Marketplace model is touted as the main e-commerce model in a country like India. The high costs associated with inventory,
issues with logistics and supply chain make marketplace more favourable vis-à-vis a pure inventory model
•Opportunity to offer variety of products online through multitude of sellers in a marketplace model
Q2. Is Flipkart’s decision to move to marketplace
model the right decision at this time?
• Marketplace model would also serve as viable model for monetization with Flipkart earning commission on every transaction and
saving up on the inventory cost incurred in pure inventory model
• Downward pressure on prices through interplay of competition between sellers will help to scale up the marketplace model
• Opportunity to satisfy the limited demand for the niche category long term tail products on marketplace platform
• However there are challenges associated with the marketplace model as the IT infrastructure is quite weak and the sellers and
retailers are not fully equipped with latest technological advancements to ensure seamless handling of business process
• Another challenge is to ensure that quality products are sold in the marketplace model
• Flipkart has taken proactive steps to tackle these challenges by careful screening of sellers that sell only genuine products and the
logistics challenges have been addressed by Flipkart offering its own logistic service to sellers
Q3. What is more critical for the growth of this platform - sellers or buyers;
higher share of wallet of existing customers or new customers?
WHY ACQUIRE SELLERS-
In the marketplace model, sellers were responsible for the inventory and Flipkart handled customer billing
and logistics, picking up from sellers the goods to be delivered to customers. Flipkart used competition
between sellers to drive prices down, and the marketplace platform quickly scaled up. Considering the
price war it was facing from other players, increasing the no. of sellers from 30,000 to 1,00,000 helped
Flipkart in providing products at reduced price.
WHY ACQUIRE BUYERS-

With more than 160 million Indians expected to shop online by 2020, the growth opportunities for Flipkart were
tremendous.
Flipkart’s objective was to garner more transactions from existing customers and acquire new customers in
other cities, the latter representing a particularly sizeable opportunity as the country continued to urbanize. With
the urbanization of India, people’s aspirations to own goods increased. Flipkart had the resources and
business model to cater to the rural population. Thus making strategies to grow customer base was imperative.
Q4. What are head products and what role do they play
in Flipkart's portfolio? What do Samsung and its
distributors think about this strategy of Flipkart?:
● Head products contributing to the majority of Flipkart’s revenue majorly include electronic
products and gadgets, predominantly mobile phone devices and cameras.
● Initially Samsung was concerned regarding the potential conflict with existing retailers by listing
their products on Flipkart.
● However, Xiaomi saw enormous success with Flipkart’s business model. Flipkart provided the
trust among customers that was lacking as Xiaomi was an inherently chinese brand.
● This has led to a significant change in samsung’s perception on Flipkart. In recent years sales of
samsung products have boomed on Flipkart and other E-commerce competitors.
Q5. What is Flipkart's path to profitability?
Would you invest in this company.
● Flipkart scaled up from 3 Mn to 4 Mn in 2015

● In Spite of the great growth, profitability remained elusive. GS estimated that alone flipkart will
need infusion of at least 20 Bn Dollar in next 5 years to develop a sustainable growth.
● But, as explained in the case and sought by us, we believe the that discount model is a way to
land grab the customers.And the discounting will eventually ebb, driven by consolidation and
diminishing money flow.
● Although, the profitability of e-tailers is questionable.
● The company is in growth stage and operating on high discounting model, but as customer gets
used to convenience and smaller cities gets access to what they don’t have, price won’t matter
much. So, we think it is a right decision to invest in the company.
THANK YOU

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Flipkart:Transitioning to

Following is the process for building an e-commerce business in India

Major Issues faced while building a ecommerce business in India includes -

● Internet penetration is Low - Internet penetration is low in India as compared to some of

WHY ACQUIRE SELLERS-

WHY ACQUIRE BUYERS-

● Flipkart scaled up from 3 Mn to 4 Mn in 2015

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