In India, Flipkart is dominating E Commerce market with 38.3% market share. Indian E Commerce market grew so much much that during Diwali Festival Sale Amazon and Flipkart jointly did sales of 9.4 Billion Dollars. Amazon's 60% sale comes from their Prime Membership.
It may be you took prime membership to listen songs or watch movie, But when it comes to order anything you will probably use Amazon because you have prime membership. But Flipkart don't have such a ecosystem.
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How Flipkart dominating without any such ecosystem?
The story starts in 2007 when Sachin and Binny Bansal quit their job from Amazon and start Flipkart in India. Similarly like Amazon, Flipkart also started by selling books. In initial days, Sachin and Binny both delivered the order themselves.
The twist came in 2009 when Flipkart starts eKart - A separate logistics wing
But the question is what eKart changed for Flipkart?
What eKart changed for Flipkart?
So the perfect answer is Consumer Expectations.
If you remember when you ordered anything from Flipkart delivery time used to show 3-4 days. But most of the time your order was delivered in 2-3 days.
When something happens like this, you used to feel delighted. This feeling comes when someone Under commit and Over Deliver
And Flipkart did this.
Today eKart delivers more than 1 crore packages every month which made eKart India's largest logistics company. If we compare company size, then Amazon is 200 times bigger company than Flipkart. Amazon also has more capacity to cashburn.
How Flipkart is beating Amazon?
So the answer is hidden in this element
That is
Consumer Demographics
If you look closely then you would find good brand products on Amazon. But if you look Flipkart closely then Flipkart has branded as well as unbranded on their platform.
So why Flipkart keep unbranded products as it will increase their inventory cost?
And from here real game begins.
Amazon's focus was big metropolitan cities while Flipkart focused to capture market of Tier 2 and 3 cities.
The question arises that it was easy to generate revenue from metropolitan cities then why they focused on tier 2 and 3 cities?
So the answer is in Consumer Behavior of people of Tier 2 and 3 cities which depends on 2 factors -
- Variety- They want more options.
- Price Point - They want product at good price point.
A middle class man goes to 10-15 stores, sees 100 products and then buy the cheaper one.
E - Commerce companies has a advantage which physical stores don't have.
The advantage is - Artificial Intelligence System.
People think overselling middle class population is very very tough.
But this is not the case. Problem is they choose wrong combinations so they can't oversell middle class people.
A middle class man over purchases when you show relevant and more cheaper product than last purchased one.
And Flipkart did this very smartly. They first brought unbranded products for tier 2 and 3 cities. And then started giving heavy discounts on these products.
But many people will say that Flipkart and Amazon's sale run at time.Yes, it's true. But interestingly, Flipkart always sells more than Amazon. The question is How?
How Flipkart sale is high then Amazon?
To understand this, understand this 2 things carefully.
1) Who buys from Flipkart?
People who want to buy mid range i.e. who don't want to do heavy purchases buys from Flipkart.
Their budget is not more than 800-10000 Rs until and unless they are not buying heavy electronics. People shopping through Amazon have no fixed budget. And during sale absolutely NO.
2) Why People buy from Flipkart?
So the answer is Brand Identity.
Flipkart's Brand Identity is because of 2 things -
- Price Point
- Delivery Availability
Those who want to shop from Flipkart know that they will get products at good rate.
And people living in remote locations also know that Flipkart will deliver their product here. Due to eKart, Flipkart's Logistics network is much powerful than Amazon.
Places where Amazon don't deliver, Flipkart deliver. Whereas Amazon is known for it's trust and quality.
There are very less chances that a tier 2 or 3 city resident who want good price point and delivery availability will shop from Amazon. Until and unless if he is getting this 2 things.
Tier 2 and 3 cities population are collectively more than metropolitan cities. And this is why Flipkart sells more than Amazon.
Coming to the 3rd element. This element gave Flipkart an unfair advantage which became bargain for their target customers.
3) Flipkart Plus memberships.
Flipkart Membership's most dominating factor is Early Access to Sales. The question is how this small thing can be so much powerful ?
So the reason is Feeling of Exclusivity.
Amazon under it's prime membership gives you access of 1 Day delivery, Prime video and also Amazon music which you can easily use on Alexa devices.
But you know what none of this things are such that can make a prime member feel superior than non prime customer.
Because you can get 1 Day delivery by paying extra 100 Rs.
But Flipkart gives early members early access to sale.
This makes members feel that those products which are going to be Out of Stock, I have option to buy them early. This provides superiority feel to them.
When a Tier 2 or 3 resident get Price Point, Availibilty and Exclusivity to season sales then volumes are confirmed.
And most importantly what are those business lessons we can learn and implement in our business ?
What are those business lessons we can learn from Flipkart and implement in our business
1) Knowing your exact customer can be a goldmine.
If you try to sell to everyone, you will sell to no one.
Every customer is different and his behaviour depends on Demographics and Ethenographics.
If you target the right customer in the right way then no one can stop the sales.
2) Nothing can beat customer centricity.
Flipkart or Amazon both the companies leave no stones unturned to please you.
Flipkart wanted to provide more variety in fashion so they acquired Myntra and Jabong. They wanted to make payment process easy so acquired PhonePe.
This both companies take decision according to customers.
Infact, Amazon rewarded a person for returning a product 137 times. Because whenever he returned the product 137 times his neighborhood saw Amazon.
So Amazon got free Branding.
Customer is God. No customer, No revenue.
Conclusion
So its important for any business to keep their customers happy keeping costs in mind.
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