With the invasion of Alibaba IPO looming over the USA markets, the competition among e-tailers has grown to a new level. Even in India, the online retail giants are bucking up to the prospect of stiff competition in the next few years. Flipkart and Snapdeal alongwith Jabong and lenskart are expanding their markets and improving their logistics to cater to a wider range of customers.
Flipkart was started in the year 2007 by Sachin and Binny Bansal, who had worked together in Amazon. Though they faced some initial difficulties and bureaucratic red-tape, they were successful in starting a new area of business in India. With the number of Internet users increasing from 50 million in 2008 to 120 million in 2012, there is a lot of scope of penetrating the markets. Thanks to the convenience offered to them by the e-tail websites in terms of choices and time constraints. In 2013, the internet users in tier II-IV cities was 34% while the users in rural areas amounted to 25% to the total amount of internet users in India. So, there is a wide customer base to target and e-tailers have realized that and are accordingly taking steps to shore up their brand. Flipkart reached its 2 year target of $1 billion turnover in a single year, thanks to pertinent internet penetration and supreme customer satisfaction.
The rumour that Amazon is going to use drones for delivery of the ordered goods has made the dosmetic e-tailers conscious and they have taken steps to improve the logistical area. Flipkart is offering delivery in a single day by shipping 90% of their products as cargo in planes and they don’t mind the freight charges as they are currently vying for customer satisfaction Flipkart has also launched its own brand of logistics called E-kart which started delivering books and now, also handles electronic gadgets and appliances. Amazon, on the other hand, has logistical deals with GATI, Blue Dart and FedEx. And E-bay has started ‘9-hour delivery’ in select places to offer improved delivery services.
Flipkart has recently acquired fellow domestic online fashion giant Myntra in an estimated 2,000 crores deal. And with this acquisition, Flipkart has decided to invest $100 million in its fashion business in the near future. This is a relatively new area for flipkart because even though it offers choices on fashion, those choices are very limited. Myntra has 650 brands ranging from Nike to Steve Madden collecting a revenue of 1,000 crore in the previous FY. Key players in the online fashion industry also include Jabong, Zovi, Firstcry and Baby oye (Baby care products). Flipkart and Myntra will have to collaborate as a unit to successfully combat their rivals in the fashion sector. Similarly, Tata sons invested in Snapdeal. Though the value of investments is still unknown, there is no denying the fact that people like to invest in these e-tailing giants. Snapdeal already had a number of investors like BlackRock, Temasek holdings and E-bay itself.
But Flipkart, alongwith other online retail websites, are facing a lot of complaints with regards to late or non-delivery of their orders. Plus, they have to address grievance regarding the quality of the products. Delhi based grievance redressal platform Akosha registered an increase in complaints from 8,000 in 2012 to 24,500 in 2013.12% of the complaints are regarding process refunds and 29% of the complaints are regarding delivery delays. Flipkart has already de-listed 50 sellers from its marketlist for not complying with the delivery standards. Flipkart and Snapdeal have combated this issue by offering assurances like ‘return-no-question-asked’ policy where people can return their product for any reason and get a refund or an exchange. But, the more pressing concern is the amount of fraudulent activities committed by the customers with regards to the COD (Cash On Delivery) system. People have ordered accessories and apparels with some other address resulting in waste in valuable delivery time. To overcome this issue, several e-tailers have started sending a missed call message wherein the person, with whose number the product has been registered, will be intimated to give a missed call to confirm his/her order. This has reduced the frauds to a certain extent.
So, reaching the peak of the e-tailing mountain is a very much possible prospect. With better customer satisfaction, improved internet marketing through search engine optimization (SEO) and even efficient logistical network can enable either the leading e-tail giants (Flipkart, Snapdeal, Amazon, etc) to gain the top spot or the trailing ones (Yebhi, Jabong, etc) to cover massive ground on their journey to the top.
Author: Vivek Subramanian