Flipkart's multipronged approach to dominate e-commerce in India

Walmart-backed Flipkart, one of the largest players in the Indian e-commerce market, is currently on a mission—to solve unique Indian problems through innovation. The company is investing heavily in technology with a focus on democratising e-commerce in India.

The company has realised that though close to 500 million people in India have access to the internet, only a fraction of them do anything more than just browse or watch videos. The top management of the company realised that 90 per cent of the new internet users in the country are native language speakers coming from tier-2 and tier-3 cities, and typing and searching in English is complex for them.

First-time users

Also, the Hindi internet user base is likely to outgrow the English by 2021. The company has introduced Flipkart in Hindi primarily for customers from tier-2, -3 cities who are more comfortable using the internet economy in their native language.

Besides, the company is working to build technology that is experiential and is working seamlessly beyond social and economic barriers. “We have already built in-house Artificial Intelligence (AI) platforms to solve a range of problems in customer experience, recommendations, merchandising, address solutioning and logistics. We are also using AI to drive our affordability and fintech charters—a huge opportunity given the low penetration of formal credit among the vast majority of India’s 1.3 billion population,” remarked Kalyan Krishnamurthy, Group CEO of Flipkart.

Though the company has been part of the Walmart Group, its senior representatives say that not much has changed in the company. Its focus on India, the working style and Indian identity are intact. “We take pride in being a homegrown, technology-driven company, working towards adoption and growth of e-commerce in India. We want the entire ecosystem, including sellers, MSMEs, farmers, customers and partners, to benefit from e-commerce, which has the potential to positively benefit the entire economy, create millions of new jobs and empower generations of entrepreneurs. Having established the industry in India and having brought the first 100 million customers online, we are now focused on bringing the next 200 million into our fold. We are expanding our network into more disconnected areas of the country, through the latest technology and our India-specific solutions,” added Krishnamurthy.

Murthy adds that Flipkart as a company has experienced the market virtually from scratch. Flipkart that started with books, today sells products and services across 80 plus categories, servicing almost 100 per cent of pin codes in India. “We believe that we have to ‘create the market to ride its growth’. We are providing market access to lakhs of domestic manufactures, MSMEs, sellers, farmers, artisans, etc. E-commerce is an extremely cost-effective, efficient channel for these sellers to access the market,” said Krishnamurthy.

The company's move to introduce Hindi interface on the Flipkart app is on lines to ease the online shopping experience for first-time customers. Statistics suggest that video content and entertainment play a key role in bridging the gap for consumers to come online and experience e-commerce. And hence, the company is also leveraging the power of video content online, the first internet touch-point for most consumers. “Keeping this in mind, we introduced ‘Flipkart Video’, a curated range of movies, shows and entertainment series for all our consumers. This new initiative can bring the consumers on board on an everyday basis and help take away any anxiety that they may have towards online shopping,” Krishnamurthy explained.

Flipkart is on a continuous mission to bridge the gap between its sellers and customers. The company looks at small sellers and brands as the backbone of the Indian retail landscape. It has over one lakh sellers offering over 80 million products. The company also has an initiative—Flipkart Samarth—for India’s artisans and NGO partners and is now aiming for access to a pan-India market, preservation of art and a permanent flow of income for the artisans.

“High cash dependency, uneven internet connectivity, lack of trust, undependable service, low tech literacy, and low disposable incomes are problems that need unique Indian solutions. Our focus is always on solving for India and that is how we build businesses,” said Rajneesh Kumar, Chief Corporate Affairs Officer, Flipkart Group. For instance, the company launched 2Gud—an online platform for refurbished products—last year. “It is an entirely new business line that solves deeply embedded problems the current players—classified listing companies—cannot solve, including quality assurance and after-sales service. We have solved such India-specific problems one-by-one through innovations,” Kumar claimed.

Marrying logistics with technology

One of the foremost areas where Flipkart has focused on is combining technology and logistics in Ekart. Interestingly, it has one of the largest supply chain network in the country and is currently doing a million shipments every day. The company is extensively using Machine Learning (ML) to fine-tune its logistics and has an internal technology team that has developed ML models that optimise delivery routes and last-mile planning.

Critical processes like picking of products to dispatching it from the warehouse, sortation in mother hubs, local runs and beat planning are all being backed by technology implementations. “We orchestrate the end-to-end fulfilment with minimal manual touch points that make the deliveries predictable and consistent. This allows us to also gracefully manage any supply chain shocks anywhere in the chain. The AI-backed and technology-centric solution enable precise location of customer addresses for deliveries. They also help in sectors where addresses are highly unorganised. Besides, there is route optimisations and dynamic planning that ensures reliable deliveries to customers. Technology also ensures scale out for timely and efficient last-mile deliveries, while matching the supply-demand needs in hyperlocal scenarios,” added Kumar.

Fashion

Online fashion is also something that Flipkart finds huge potential that has not been fully tapped. “Fashion is almost a $100-billion market in the country with only 6 per cent having been penetrated by the online retail players. Today, almost 50 per cent of our new customers explore Flipkart through fashion. Customers from tier-3 and -4 cities visit Flipkart for fashion-related purchases, and we have witnessed a massive growth last year,” said Rishi Vasudev, Senior Vice President and Group Head – Fashion at Flipkart. “With growth in disposable income, a noticeable trend is the increased spends on products that fall in the fashion category. We have a massive head-start to capitalise on this growth, and our understanding of India and what consumers want in this category, the diverse consumer base that Flipkart Group (Flipkart and Myntra-Jabong) can serve with a curated selection, will help us to not only drive better adoption, but also grow this market.”

Vasudev added that there have been several initiatives that the company has taken towards online fashion category, such as including fresh selection on Flipkart Fashion every week. This guarantees that there is something new for everyone, every day. Besides, around 20,000 new styles are added every month, of which 5,000 are directly sourced from brands. This helps in the availability of the latest styles and trends on the platform.

Recently, the company partnered with Lifestyle to expand its product portfolio and has brought international brands like H&M through Myntra that has around of 18 private label brands. The company also went into an agreement with Authentic Brands Group (ABG) that helped Flipkart manage Nautica’s online and offline business, through a network of franchise partners, helping them strengthen the brand and its business in India. At the same time, the company has relaunched 2GUD that caters to consumers who are not brand-conscious, but prepared to buy quality products at affordable prices.

Grocery foray

Grocery is another category where the company feels it has huge potential. However, it is equally a challenging space as the items need to be fresh and delivered within a stipulated time. “Grocery is a category that represents both the potential as well as the complexities of e-commerce. In India, it is a highly under-penetrated category with just 0.5 per cent of it online. But it makes up 70 per cent of all retail; so the opportunity is huge,” Manish Kumar, Head of Groceries at Flipkart told THE WEEK. “We have solved critical problems such as quality assurance, delivery convenience and shopping experience, the pillars for our grocery business model. We were clear that our initial foray must be in a segment where we can make a clear difference. So we entered the once-a-month grocery shopping market, which typically comprises of staples and consumer packaged goods, has a larger order size, is easier to store, package and deliver.”

He further explained that the app-in-app experience for groceries is tailor-made to help users buy multiple items seamlessly. “It is like navigating in an aisle at an offline store, where you can buy products of similar categories that are placed next to each other. We have replicated that experience online,” added Manish.

For further market expansion, Flipkart has also focused strongly on consumer finance innovations such as No Cost EMI, Debit Card EMIs, Buy Now Pay Later, Product Exchange (Prexo) and BuyBack Guarantee. These, the company said, have driven affordability among consumers in cities, towns as well as villages. “Consumer finance affordability programmes are a major draw for first-time users wanting to give e-commerce a try,” said Manish.