Advantages and Disadvantages of Flipkart Business Model in 2018
Gone were the days when people have to visit the store to buy anything. And then the phase of world changed with the internet. The top E-commerce business like Amazon and Alibaba jump into market with the unique concept where people can buy anything with the click while sitting in home. By inspiring, entrepreneurs started to customize and launch their own e-commerce clone like Amazon, Alibaba, etc.
In our generation, there are many online shopping sites available such as Flipkart, Amazon, eBay, Myntra, and etc. This type of online-offline-integration through seller registration in anywhere in the world is really exceptional.
Online Shopping for Clothes, Jewelry, Electronics, Laptop, Computers, Mobile, Books, DVDs, and more announced its indirect entry through Shop Online Books, Mobile Phone, Clothes, Watches, Laptops, Computers, Furniture, Tablets, Camera, and More at Junglee.com. Of course PE/VC investments in various E-Commerce ventures in Online Shopping Site.
Flipkart is a very famous ecommerce store having its head office at Bangalore. With its annual sales of Rs 2,000 crore, the company stands as one of the best selling online shopping site in India. A small online business, initiated as a bookstore, today sells almost 25+ products per minute that include everything from mobile, laptop, computer, clothing, footwear, toys, home furnishings, and etc.
Flipkart Business Model:
In Flipkart model, the Ecommerce site player control end to end value chain like right from procurement to delivery is controlled by the service provider. Flipkart works on this Model, therefore, will refer this model as Flipkart Model.
Advantages of Flipkart Model:
(1) Operation Scale offers high bargaining power to Flipkart therefore cost is low.
(2) High Scale Margin Business: Margins in Flipkart Business Model are between 20-25%
(3) Potentiality repeated business is very high because end objective of Flipkart by handling complete value chain to increase customer satisfaction and reduce costs of the products.
Disadvantages of Flipkart Model:
(1) Logistics: Logistics can either advantage or disadvantage but in the current scenario, Logistics is a major embarrassment for all E-Commerce players. Flipkart drives approx 65% logistics operations but still, it has to trust on logistics of suppliers and for third-party providers, 35% of deliveries. The big problem of handling logistics is that to increase the cost of operation exponentially if it's not managed properly and efficiently. For the long run, if Flipkart handles the logistics well then it can also become killer USP for its success.
(2) Portfolio of Limited Products: Managing own products inventory to adds to the cost of operation because nobody can create unlimited storage space. In this case, a company can only provide the limited product portfolio without scaling up warehouse efficiency. For the company, It is really difficult to handle Learning Inventory Section, Curve of Procurement, and Logistics department. Even a small mistake can add to cost because any inventory lying unsold for long not only clutch the space and its also opportunity loss for company good impression.
(3) High Investments: High investments really required in such models in order to manage and control end to end value chain.
Conclusion:
After analyzing the Flipkart Models, we can conclude that Flipkart Model has very high probability of being successful because of its advantages in terms of comfort of managing the business, Cost Advantage by creating competition among sellers, reliable factors by incorporating Sellers Feedback Mechanism and peace of mind to buyers that supplier will get money only after he will receive the product else payment will be refunded back to buyer. All these factors are very important for Customer according to Flipkart Model is best suitable for Markets and its future of E-Commerce Business.