Scribd Logo
Upload

Welcome to Scribd!

  • Flipkart: Transition To A Marketplace Model: Transition To A Marketplace Model

    Uploaded by

    Satbir Singh
    1K views1 page
    Flipkart transitioned to a marketplace model to continue growing faster than competitors in India's rapidly expanding e-commerce market. This was necessary to cope with immense market growth and the expected increase in online buyers from 20 million in 2012 to over 160 million by 2020. However, the marketplace model reduced service levels as quality assurance became difficult with more sellers. To address this, Flipkart introduced programs to distinguish genuine sellers. Additionally, heavy discounting and incentives from e-commerce companies led to expenses exceeding revenues, which was unsustainable as investors required returns. Flipkart needs alternative revenue sources like digital advertising to maintain competitiveness while improving service quality.

    Original Description:

    Case analysis of Flipkart: Transition to a Marketplace Model

    Original Title

    Flipkart: Transition to a Marketplace Model: Transition to a Marketplace Model

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    Flipkart transitioned to a marketplace model to continue growing faster than competitors in India's rapidly expanding e-commerce market. This was necessary to cope with immense market growth and the expected increase in online buyers from 20 million in 2012 to over 160 million by 2020. However, the marketplace model reduced service levels as quality assurance became difficult with more sellers. To address this, Flipkart introduced programs to distinguish genuine sellers. Additionally, heavy discounting and incentives from e-commerce companies led to expenses exceeding revenues, which was unsustainable as investors required returns. Flipkart needs alternative revenue sources like digital advertising to maintain competitiveness while improving service quality.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    1K views1 page

    Flipkart: Transition To A Marketplace Model: Transition To A Marketplace Model

    Uploaded by

    Satbir Singh
    Flipkart transitioned to a marketplace model to continue growing faster than competitors in India's rapidly expanding e-commerce market. This was necessary to cope with immense market growth and the expected increase in online buyers from 20 million in 2012 to over 160 million by 2020. However, the marketplace model reduced service levels as quality assurance became difficult with more sellers. To address this, Flipkart introduced programs to distinguish genuine sellers. Additionally, heavy discounting and incentives from e-commerce companies led to expenses exceeding revenues, which was unsustainable as investors required returns. Flipkart needs alternative revenue sources like digital advertising to maintain competitiveness while improving service quality.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 1

    Flipkart: Transitioning to a Marketplace Model

    Introduction: The dilemma of marketplace model


    Flipkart has made a transition to the marketplace model to enable itself to continue growing
    faster than other players in Indias rapidly expanding and fiercely competitive e-commerce
    market. Indian market has seen immense growth in the e-commerce market and is expected to
    grow further in the coming years. In 2012, there were 20 million online buyers; by 2020, the
    number of online buyers is expected to be more than 160 million. The namber of metropolitan
    cities is also expected to grow from 54 to 69, accounting for 45% and 54% of the GDP,
    respectively, during the same period. To cope up with this growth rate, there is no other option
    for Flipkart but to go for the marketplace model if it wants to maintain market share.
    However, there are some issues which come with the marketplace model. The service level
    reduced in 2015, as Flipkart expanded to smaller metros. Assuring quality across all the sellers
    becomes a herculean task as the number of sellers increase rapidly. To address this Flipkart came
    up with Flipkart Advantage (FA) which was similar to Amazons Fulfilled by Amazon. This
    distinguished between genuine sellers and non genuine sellers.

    The price war


    By 2013, all the e-commerce companies had gone into a price war. An Indian e-tailer was
    incurring expenses on an average 1.35 times GMV, as a consequence of heavy discounting,
    marketing, free shipping, cash incentives and other enticements used to attract customers. This
    was all being heavily funded by venture capitalists. Flipkart was fuelled by $3 billion investor
    funding. It had scaled rapidly to $4 billion GMV rapidly and had ambitions to go up to $12
    billion.
    But how long could they continue like this? Investors would need their money soon. They will
    soon need to leverage themselves based on the service quality rather than price to make it more
    sustainable. However, going with the marketplace model was hurting the service quality. It needs
    to look at other sources of revenue like digital marketing. Amazon generates $1 billion from
    advertising. Flipkart should also dig deeper into it and use data analytics to target specific user
    groups. Revenue through advertising can help Flipkart maintain price competitiveness and
    service quality simultaneously.

    You might also like