Case Study Description of Flipkart: Grappling with Product Returns
In June 2016, Indian e-commerce giant Flipkart Private Limited (Flipkart) faced a common issue among online retailers: the firm needed to optimize its product return rates to reduce losses caused by returns. Accordingly, Flipkart changed its return policy, including raising the commission fees charged to sellers by an average of 5 per cent. Many sellers resented the policy change, and more than 1,800 led an online protest against Flipkart, which was unprecedented in India. These sellers made their accounts inactive and removed the product listings for nearly 1 million product units. Seeing an opportunity, Amazon India decreased its commissions on various product categories by 2-7 per cent to lure disgruntled sellers to its platform. While its competitors experienced rapid growth, Flipkart struggled to keep the market share it had acquired so far. The company experienced a massive drop in its valuation during fiscal year 2015-16, and had not registered any profit since its inception in 2007. Flipkart had to reduce its losses resulting from a high number of returns without displeasing both of its key stakeholders-sellers and customers. Sanjeev Prashar and Amit Kumar Mukul are affiliated with Indian Institute of Management Raipur. Mukesh Kumar is affiliated with Institute of Management Technology, Nagpur.
Authors :: Sanjeev Prashar, Mukesh Kumar, Amit Kumar Mukul
Swot Analysis of "Flipkart: Grappling with Product Returns" written by Sanjeev Prashar, Mukesh Kumar, Amit Kumar Mukul includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Flipkart Sellers facing as an external strategic factors. Some of the topics covered in Flipkart: Grappling with Product Returns case study are - Strategic Management Strategies, and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Flipkart: Grappling with Product Returns casestudy better are - – central banks are concerned over increasing inflation, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, increasing inequality as vast percentage of new income is going to the top 1%,
cloud computing is disrupting traditional business models, increasing energy prices, etc
Introduction to SWOT Analysis of Flipkart: Grappling with Product Returns
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Flipkart: Grappling with Product Returns case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Flipkart Sellers, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Flipkart Sellers operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Flipkart: Grappling with Product Returns can be done for the following purposes –
1. Strategic planning using facts provided in Flipkart: Grappling with Product Returns case study
2. Improving business portfolio management of Flipkart Sellers
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Flipkart Sellers
Strengths Flipkart: Grappling with Product Returns | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Flipkart Sellers in Flipkart: Grappling with Product Returns Harvard Business Review case study are -
High brand equity
– Flipkart Sellers has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Flipkart Sellers to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Cross disciplinary teams
– Horizontal connected teams at the Flipkart Sellers are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Diverse revenue streams
– Flipkart Sellers is present in almost all the verticals within the industry. This has provided firm in Flipkart: Grappling with Product Returns case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Innovation driven organization
– Flipkart Sellers is one of the most innovative firm in sector. Manager in Flipkart: Grappling with Product Returns Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Effective Research and Development (R&D)
– Flipkart Sellers has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Flipkart: Grappling with Product Returns - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Sales & Marketing industry
– Flipkart: Grappling with Product Returns firm has clearly differentiated products in the market place. This has enabled Flipkart Sellers to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Flipkart Sellers to invest into research and development (R&D) and innovation.
Ability to recruit top talent
– Flipkart Sellers is one of the leading recruiters in the industry. Managers in the Flipkart: Grappling with Product Returns are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High switching costs
– The high switching costs that Flipkart Sellers has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Strong track record of project management
– Flipkart Sellers is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Flipkart: Grappling with Product Returns Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Superior customer experience
– The customer experience strategy of Flipkart Sellers in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Flipkart Sellers is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Flipkart Sellers is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Flipkart: Grappling with Product Returns Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses Flipkart: Grappling with Product Returns | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Flipkart: Grappling with Product Returns are -
Need for greater diversity
– Flipkart Sellers has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Flipkart: Grappling with Product Returns, it seems that the employees of Flipkart Sellers don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High cash cycle compare to competitors
Flipkart Sellers has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Flipkart Sellers is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Flipkart: Grappling with Product Returns can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Capital Spending Reduction
– Even during the low interest decade, Flipkart Sellers has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow decision making process
– As mentioned earlier in the report, Flipkart Sellers has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Flipkart Sellers even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High operating costs
– Compare to the competitors, firm in the HBR case study Flipkart: Grappling with Product Returns has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Flipkart Sellers 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Sanjeev Prashar, Mukesh Kumar, Amit Kumar Mukul suggests that, Flipkart Sellers is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Products dominated business model
– Even though Flipkart Sellers has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Flipkart: Grappling with Product Returns should strive to include more intangible value offerings along with its core products and services.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Flipkart: Grappling with Product Returns, in the dynamic environment Flipkart Sellers has struggled to respond to the nimble upstart competition. Flipkart Sellers has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Interest costs
– Compare to the competition, Flipkart Sellers has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities Flipkart: Grappling with Product Returns | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Flipkart: Grappling with Product Returns are -
Using analytics as competitive advantage
– Flipkart Sellers has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Flipkart: Grappling with Product Returns - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Flipkart Sellers to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Flipkart Sellers can use these opportunities to build new business models that can help the communities that Flipkart Sellers operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Flipkart Sellers in the consumer business. Now Flipkart Sellers can target international markets with far fewer capital restrictions requirements than the existing system.
Buying journey improvements
– Flipkart Sellers can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Flipkart: Grappling with Product Returns suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Flipkart Sellers can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Flipkart Sellers can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Flipkart Sellers can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Building a culture of innovation
– managers at Flipkart Sellers can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Manufacturing automation
– Flipkart Sellers can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Flipkart Sellers is facing challenges because of the dominance of functional experts in the organization. Flipkart: Grappling with Product Returns case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Creating value in data economy
– The success of analytics program of Flipkart Sellers has opened avenues for new revenue streams for the organization in the industry. This can help Flipkart Sellers to build a more holistic ecosystem as suggested in the Flipkart: Grappling with Product Returns case study. Flipkart Sellers can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Flipkart Sellers can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Flipkart Sellers to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Flipkart Sellers to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Flipkart Sellers to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Threats Flipkart: Grappling with Product Returns External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Flipkart: Grappling with Product Returns are -
Stagnating economy with rate increase
– Flipkart Sellers can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Flipkart Sellers with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Flipkart Sellers high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Flipkart Sellers.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Flipkart Sellers can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Consumer confidence and its impact on Flipkart Sellers demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Regulatory challenges
– Flipkart Sellers needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Shortening product life cycle
– it is one of the major threat that Flipkart Sellers is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Flipkart Sellers needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Flipkart Sellers can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Flipkart Sellers needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Flipkart Sellers business can come under increasing regulations regarding data privacy, data security, etc.
Increasing wage structure of Flipkart Sellers
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Flipkart Sellers.
Technology acceleration in Forth Industrial Revolution
– Flipkart Sellers has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Flipkart Sellers needs to keep up with the evolution of technology in the Sales & Marketing sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Weighted SWOT Analysis of Flipkart: Grappling with Product Returns Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Flipkart: Grappling with Product Returns needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Flipkart: Grappling with Product Returns is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Flipkart: Grappling with Product Returns is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Flipkart: Grappling with Product Returns is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Flipkart Sellers needs to make to build a sustainable competitive advantage.