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Saving Private Flipkart

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93 pointsgwintrob27 comments

As a long time customer and admirer of Flipkart, I have no hesitation in saying that there is something massively wrong at Flipkart. Earlier FK used to be my goto destination for buying anything online, since last 1.5 years things have changed drastically. Every single product, that i need to buy is either cheaper on Amazon India or is not available at all on FK- every single product. Customer service that used to be friendly is not welcoming either. On the other hand, Amazon India seems to be obsessed about customer service, they will readily offer you GV for a slightest of mistake on their part. Their product inventory is massive. Essentially Amazon india has become what FK used to be 3 years back and FK seems uninterested in doing business anymore.

Customer service at FlipKart has really gone downhill.

The last couple of times I've reported incorrect listings on FlipKart for books (wrong cover image or wrong author name) I've actually been told "sorry, we can't help you with this."

This is the exact reason for how I unknowingly switched from Flipkart to amazon.Now I think twice before making any big purchases on Flipkart.

Same with me. I almost stopped looking/searching at FK. It is either not available at FK or amazon is little cheaper. I have not purchased anything recently on FK, so can't comment on the customer service.

I ordered a ball on FK and a week later I got an email saying that my order was canceled due to lack of stock. This has happened to me on Amazon as well, but the difference was that the email from Amazon came in a day or two.

Amazon is burning much more money than flipkart right now. They have invested more than flipkart's total funding and still doing quarter of Flipkart business. Flipkart on the other side is trying to reduce its loss and trying to do breakeven in few categories.

Source for the figures? just curious.

Sorry , was away for sometime. Source for market share: http://m.economictimes.com/industry/services/retail/indian-e... Source for funding: actually I was wrong on this point. Amazon have invested $2B and flipkart till now had $3.3B funding.

It is so easy to just throw in some vague ideas without any substantial data behind it. A more logical and researched answer to this article is - https://medium.com/@sumanthr/why-private-flipkart-doesn-t-ne...

The original article seems more of crystal-gazing and rationalizing for author's belief. This one is better.

The lynchpin of this "logical argument" appears to be a Business Standard article that references a Morgan Stanley report that says FK is 4 times as big as AMZN in GMV. While neither of the two authors (and us included) may have the "raw data" that Morgan Stanley supposedly has at its command, we don't need to be geniuses to understand that GMV via exclusive deals with one phone manufacturer after another can only buy so much PR runway.

What really matters is the bottomline. As Buffett would say, it's only when the tide goes out (or in this case, when the funding tap runs dry), do you discover who's been swimming naked. Having said that as a consumer, less competition means less deals. So, I do hope all the shopping sites have their swimming trunks on :)

>Firstly, Haresh neglects to mention that the “app-only” strategy was attempted for Myntra and not for Flipkart itself.

This is inaccurate. Flipkart itself was moved to app-only on mobile. The move did not go well, and 6 months they created some sort of a compromised web-app kind of thing that lags and annoys the user.

So it was not just myntra where "app-only" was attempted. On a personal note, as I have mentioned in another comment, this single instance apathy towards the consumer means that I always visit Amazon first, and Flipkart second.

On the basis of customer satisfaction only, Amazon is far ahead of Flipkart at least in India.

If you search Quora for a Flipkart vs. Amazon, you will be amazed by the reviews (most favour Amazon).

This is just one: https://www.quora.com/Is-Flipkart-better-than-Amazon-in-Indi...

There are many more such questions on Quora. I've read a lot of reviews and this was the result: Amazon is more responsive to complaints, returns, usually cheaper and satisfying the customer. Flipkart is doing way worse than Amazon in these departments. There are even a few answers about how Flipkart delivered the wrong product.

Amazon is not doing a great job either. They shipped a Macbook Air when I had ordered a Macbook Pro. They didn't release my replacement until their supposedly superior system registered my returns. I had to contact their support to tell them that it was returned a week back. After all the song and dance, they shipped a Macbook Air again as replacement. How is that for a market leading performance!

True, I was a huge fan of Flipkart since the time it only used to sell books. Then the delivery charges increased, discount reduced and Amazon and Snapdeal looked like much better options.

Even now I look at flipkart to check out the price of stuff, but it is usually more than the rest.

Flipkart lost customers confidence, is what I think.

I think it is really hard to compete with Amazon on cost. That is Amazon's strength and you will most likely lose that battle unless the government has some kind of protective measures in place or you get another titan like Alibaba or Google taking a majority stake. Flipkart still has plenty of mindshare but they need to innovate. They are not going to win based on prices alone.

Often some stuff is sold by third party dealers and shipped by Amazon. I suspect that is probably the case for the Macbook. Amazon typically has much lesser control over such sales, and would need to adhere to the dealer's policies.

I feel this analysis is missing the forest for the trees.

Most of this comes down to Flipkart losing money to gain gross sales. However you may feel about this strategy, it is basically what everyone, including Amazon, does. Be the cost leader to starve out your competition until they go broke or go home.

However, Flipkart has two advantages over Amazon:

1) Mindshare. Flipkart is still the #1 association with e-commerce in India. Obviously this can change fast. Myntra is the only name for online clothes, which as the article mentions, is higher margin.

2) Flipkart is a local company. In this case it gives them two sub-advantages, a) they are allowed to sell directly to customers (foreign companies are not allowed to, Apple is currently trying to get an exception). This forces Amazon to act as more of a "portal", almost like Snapdeal. b) In India a lot of people are pushing for "India first" strategies that favor local tech over foreign companies. This gives Flipkart a slight political advantage.

The article claims Amazon is "nipping at their heels". It's true, but the gap is much wider than you might think. Amazon pushes how they surpassed Flipkart in traffic, but in actual sales, Flipkart has a pretty large lead.

Anyways, I wouldn't count Flipkart out yet. Amazon is spending money like crazy, and they have deep pockets, but so does Flipkart. At this point I'd say its anyone's game, but with the current advantage to Flipkart.

The real current winners are Indian consumers, getting heavily subsidized goods.

Flipkart is not exactly a local company. If I'm right, most of their equity is held by a singaporean holding company. There's also this aspect that a loss-making company cannot go public in India, so Flipkart have structured themselves to IPO elsewhere.

Most of the points you have made here are grossly incorrect. Here is the reality :

Flipkart is a local company

No its not. The VC money invested in it is counted as FDI, and even its holding company is based out of Singapore. So it does not enjoy any such advantage. Its been several years since Flipkart stopped operating on the inventory model, it operates on the same marketplace model as Amazon/Snapdeal.

The article claims Amazon is "nipping at their heels".

It's true, but the gap is much wider than you might think. Amazon pushes how they surpassed Flipkart in traffic, but in actual sales, Flipkart has a pretty large lead.* Nope. The difference is in the range of only ~20% now. Flipkart does not have a magical conversion ratio that it sales can be a multiple of Amazon despite lower visits. You might have been misleaded by considering the figures of the seller side as well. Need to consider only marketplace revenues.

Anyways, I wouldn't count Flipkart out yet. Amazon is spending money like crazy, and they have deep pockets, but so does Flipkart.

Flipkart does not have pockets of its own. Its running on investor money, which comes with conditions unlike Amazon which can invest its own earnings from US and elsewhere, well justified owing to earnings growth potential.

The real current winners are Indian consumers, getting heavily subsidized goods.

Can't agree more with this point. FYI Amazon and Flipkart are nowhere close to the magnitude of cashback offered by Paytm (backed by Alibaba).

As per the recent guidelines by the Govt. of India, "E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods and services and shall maintain level playing field" [1]. This might be blessing in disguise for Flipkart, as they can concentrate more on profits and operations, than fighting it out with deep-pocketed Amazon to woo the customers with discounts.

E-commerece is still upcoming sector in India, and have enough customers for multiple giants to survive.

[1] http://www.firstpost.com/business/decoder-100-fdi-in-e-comme...

Here's a pretty compelling counterpoint: "Why Private Flipkart doesn't need saving" - https://medium.com/@sumanthr/why-private-flipkart-doesn-t-ne...

Everyone keeps forgetting: unlike Amazon, FK has no profit generating units within the company.

EVERYTHING FlipKart does loses it money. If they don't get funding, they're toast as a company. If they jack up prices, they lose customers to Amazon.

In this unending war, Amazon has a secret weapon: AWS. AWS is a massive cash cow for Amazon that's also profitable. This is profit Amazon can keep pumping back into its other businesses, including the loss making Amazon India operations.

FK will run out of money before Amazon does. Simple as that.

And amazon took 15-18 years to make that cash cow. Flipkart will also figure out something in next few years. For all the negativity for flipkart, they have much much bigger share in apparel which is the place where margins are higher and profitability is easier.

And amazon can not keep spending money on India. They have to convince their shareholders that investing in India will be profitable. So if flipkart being market leader will not be able to convince someone for more money, it will put pressure on amazon also for the same.

There is no doubt that India will be profitable for Amazon. They're frozen out of China because of protectionist policies, they already own the US and Europe, so if they want to grow, India has to be part of that strategy. Given that their biggest competitor in India is on its heels, I would expect them to throw more money into the country, not less.

It's not that there's absolute certainty that investing in India will be profitable -- it's just that Amazon doesn't really have any better options if they want to continue to grow.

Flipkart was good, much better than alternatives. Nowadays I avoid it just because they wouldn't let me browse their website on mobile and at one point their entire desktop website was covered with "Download our app!". They even went so far as to show higher prices on the website than the app. Businesses should think 10x before forcing their will on consumers, specially if it makes no sense for the consumer.

On the other hand, I do find Flipkart to be a better organized marketplace for smartphones. You can filter by manufacturer, OS, price, color, storage, everything. Also, you get all variants of a phone on the same page. Amazon shows 5 different listings of the same phone, with different color and storage options, which is IMO lame.

The important point was in the middle in a few sentences; how FK can't compete with the algorithm backed d might of Amazon. Amazon just has a more robust recommendation engine and a customer review system infrastructure that's years ahead.

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