Flipkart - Making Online Shopping Affordable for Tier II Shoppers
Case Code: CLMM149
Case Length: 5 Pages
Pub Date: 2020
Teaching Note: Available
Organization: Flipkart Internet Private Limited
Themes: E-commerce, E-Business Strategy, Internet Platforms, Segmentation
The case ‘Flipkart – Making Shopping Affordable for Tier II Shoppers’ briefly describes Flipkart’s long-term business strategy to become a value player in the Tier-II and III cities of India. The case delves specifically into the various credit products offered by the e-tailer to attract more buyers from Tier-II cities to its e-commerce platform. These include partnerships with a number of large banks to offer equated monthly installments (EMIs) on debit cards, zero interest or no cost EMIs, and payment options through Paytm to buyers.
The case also focuses on certain strategic moves by Flipkart to improve affordability and convenience for small town shoppers, including launching ‘Flipkart Pay Later’ and applying for a non-banking financial company (NBFC) license. The case ends with a look at Flipkart’s continuing efforts to scale up the GMV (gross merchandise value), bring more medium and micro, small and medium enterprises (MSMEs) onto its platform, and focus on video commerce aimed at consumers from small towns and lower-income groups.
- Understand the benefits of aligning corporate and marketing strategy
- Learn about the factors influencing online buyer behavior
- Become aware of the need to offer affordability and convenience to online shoppers
- Understand the need to offer credit and financing options to build buyer and seller loyalty
- Gain an understanding of how to build an e-commerce ecosystem
In 2018, Walmart Inc. (Walmart), the US-based retail giant, acquired a controllable stake in Bengaluru, India- based e-commerce company Flipkart for US$16 billion. Launched in 2007, Flipkart had grown exponentially to become one of India’s largest e-commerce companies. Its inventory included more than 80 million products across 80 categories, including books, clothes, home & kitchen appliances, footwear, mobiles, laptops, and baby care. About 100 million registered users and 100 thousand sellers transacted on the e-commerce platform.
Post the acquisition by Walmart, Flipkart decided to focus on Tier-II cities of India and, as part of its long-term business strategy in the country, shift its proposition from efficiencies in delivery to becoming a value player. The company was of the view that this differentiator would work in its favor and help to grow its business further. Another reason for the shift in focus was that fashion was the biggest category for Flipkart and sales from Tier II and III locations accounted for around 70 per cent of the total sales and the micro sellers accounted for 80 per cent of the total sales in terms of value. According to Rajneesh Kumar (Kumar), Chief Corporate Affairs Officer, Flipkart,
Online Retailing; Online Buyer Behavior; Business Strategy; Online Partners; Demographic Segmentation; Credit Products; Online Payment Options; Online Returns; Customer Value; Growth Strategy; Social Commerce
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