Sei sulla pagina 1di 53

Minor Project Report (Case Study)

On

Goal Setting And Decision Making Strategies


Submitted By:
Kajal Vats
B.B.A. 4th Sem.
Roll no.1705465071022
Sub code: 407

ALIGARH COLLEGE OF ENGINEERING AND TECHNOLOGY


AFFILATED BY B.R.AMBEDKAR, UNIVERSITY
1
Acknowledgement

With immense pleasure, I would like to present this minor project report (case study) on Flipkart

Private Ltd. I take the opportunity to express my gratitude to all of them who in some or the other

way helped me to accomplish this project. The study cannot be completed without your guidance,

assistance, inspiration and co-operation.

I owe our gratitude to respondents of the report, without their help I would have been unable to

complete my project. These people have really been enough to help me in completing project

report.

I would also like to thank with a deep sense of Gratitude to my teacher to shape my understanding

towards the project. It was because of her immense help and support that this project has been duly

completed.

However, I accept the sole responsibility for any possible error and would be extremely grateful

to the readers of this project if they bring such mistakes to my notice.

2
Preface

The bookish knowledge of any program, which we get from educational institutions, is not enough

to be used in our day-to-day life. The more practical knowledge we have, the more beneficial it is

for our learning.

To make the students aware of the working of the business world every student of BACHELOR

OF BUSINESS ADMINISTRATION (4th Semester) has to undergo a minor project report where

I experiences many aspects of business under the supervision of Professional Managers.

I strongly believe that the knowledge gained from this experience is more than the knowledge

gained from the theories in the book.

3
Certificate

This is to certify that the content of this project entitled, case study on Flipkart (Goals and Decision

making strategies) by Kajal Vats is the bona fide work of her for consideration in partial fulfillment

of the requirement of syllabus and to teach many aspects of business under the supervision of

Professional Managers.

The original research work was carried out by her under my supervision in the academic year

2018-19. On the basis of the declaration made by her I recommend this project report for

evaluation.

4
Index

S.No Particulars Page No.

1 Introduction 6-10

11-18
2 Goals of the Organization

3 Decision making strategies 19-20

4 What is acquisition strategy? 21

5 Acquisition done by Walmart 22-28

6 Startups acquired by Flipkart 29-39

7 The deal: Walmart and Flipkart 40

8 Reason for the deal 41-42

5 things that went wrong with


9 43-47
Flipkart

10 Objective of the study 48

5
11 Conclusion 49

12 Bibliography 50

6
On the basis of:- Goal Setting And Decision Making Strategies

The online retail industry in India is expected to grow to Rs. 7000 crores by 2015. Its size in 2013

is Rs. 2500 crores. By 2014 India is expected to become the 3rd largest nation of Internet users

and this would provide huge potential to the online retail Industry. Among the major cities in India,

consumers in Mumbai topped the chart in doing online shopping followed by Ahmadabad and

Delhi. As per Google study conducted in 2012, 51 percent of the traffic for its Great online

shopping festival (GOSF) was due to customers from cities other than the four metros. Referring

to the growth in online sales, Nitin Bawankule, industry director, e-commerce, online classifieds

and media/entertainment at Google India said, “Top motivators for shopping online include cash

back guarantee, cash on delivery, fast delivery, substantial discounts compared to retail, and access

to branded products”. The E –commerce space in India has seen a lot of action and there are many

online players like flipkart.com, Myntra.com, Fabmart, India plaza and India times shopping.

Amazon.com made an indirect entry through Junglee.com. The reason for this indirect entry is the

result of government policy towards foreign direct investment. The Government of India

announced in September 2012 the revised foreign direct investment policy in retail. As per this

announcement foreign investments are blocked in e-commerce sector while allowing 51 percent

FDI in multi-brand retail stores and 100 percent FDI in single brand retail. Amazon has been

eyeing the Indian E commerce market which is estimated around $2 billion.

Flipkart.com is one among the leaders in the E-commerce space in India having a spectacular

growth since its inception. As per Indiaranker.com ranking of top ecommerce web sites in India,

flipkart.com takes the second position. With the indirect entry of Amazon.com and huge
7
investments by other companies in the Ecommerce space, flipkart.com has to gear up with

strategies to take on its competitors and particularly Amazon.com.

Flipkart was founded in October 2007 by Sachin Bansal and Binny Bansal, who were both alumni

of the Indian Institute of Technology Delhi and formerly worked for Amazon. The company

initially focused on online book sales with country-wide shipping. Following its launch, Flipkart

slowly grew in prominence by 2008; it was receiving 100 orders per day. In 2010, Flipkart acquired

the Bangalore-based social book discovery service we read from Lulu.com. In late 2011, Flipkart

made several acquisitions relating to digital distribution, including Mime360.com and the digital

content library of Bollywood portal Chakpak. Contents History Coordinates: 12°56′00″N

77°41′40″E In February 2012, the company unveiled its DRM-free online music store Flyte.

However, the service was unsuccessful due to competition from free streaming sites, and shut

down in June 2013. In May 2012, Flipkart acquired Letsbuy, an online electronics retailer. In May

2014, Flipkart acquired Myntra, an online fashion retailer, for 20 billion (US$280 million). Myntra

continues to operate alongside Flipkart as a standalone subsidiary; the site focuses on an upscale,

"fashion-conscious" market, while Flipkart itself focuses on the mainstream market and major

international brands. In February 2014, Flipkart partnered with Motorola Mobility to be the

exclusive Indian retailer of its Moto G smart phone. Motorola also partnered with Flipkart on the

Moto E—a phone targeted primarily towards emerging markets such as India. High demand for

the phone caused the Flipkart website to crash following its midnight launch on 14 May. Flipkart

subsequently held exclusive Indian launches for other smart phones, including the Xiaomi Mi3 in

July 2014 (whose initial release of 10,000 devices sold out in around 5 seconds) the Redmi 1S and

Redmi Note in late-2014 (which saw similarly accelerated sellouts) and Micromax's Yu Yunique

2 in 2017.On 6 October 2014, in honour of the company's anniversary and the Diwali season.

8
Flipkart held a major sale across the service that it promoted as "Big Billion Day". The event

generated a surge of traffic, selling US$100 million worth of goods in 10 hours. The event received

criticism via social media over technical issues the site experienced during the event, as well as

stock shortages. In March 2015, Flipkart blocked access to its website on mobile devices, and

began requiring that users download the site's mobile app instead. The following month, Myntra

went further and discontinued its website on all platforms, in favor of operating exclusively

through its app. The "app-only" model, however, proved to be unsuccessful for Myntra (reducing

sales by 10%), and its main website was reinstated in February 2016. The experiment with Myntra

led to suggestions that Flipkart itself would perform a similar move, but this did not occur. In

November 2015, Flipkart launched a new mobile website branded as "Flipkart Lite", which

provides an experience inspired by Flipkart's app that runs within smartphone web browsers. In

April 2015, Flipkart acquired Appiterate, a Delhi-based mobile marketing automation firm.

Flipkart stated that it would use its technology to enhance its mobile services. In October 2015,

Flipkart reprised its Big Billion Day event, except as a multi-day event that would be exclusive to

the Flipkart app. Flipkart also stated that it had bolstered its supply chain and introduced more

fulfillment centers in order to meet customer demand. Flipkart achieved a gross merchandise

volume of US$300 million during the event, with the largest volumes coming from fashion sales,

and the largest value coming from mobiles. In December 2015, Flipkart purchased a minority stake

in the digital mapping provider Mapmy India. The company stated that it would license its data to

help improve delivery logistics. In 2016, Flipkart acquired the online fashion retailer Jabong.com

from Rocket Internet for US$70 million, as well as the UPI mobile payments startup PhonePe.

In January 2017, Flipkart made a US$2 million investment in Tiny step, a parenting information

startup. In April 2017, eBay announced that it would sell its Indian subsidiary eBay. In to Flipkart

9
and make a US$500 million cash investment in the company. eBay promoted that the partnership

would eventually allow Flipkart to access eBay's network of international vendors, and vice versa,

but these plans never actually came to fruition. In July 2017, Flipkart made an offer to acquire its

main domestic competitor, Snapdeal, for around US$700–800 million.

It was rejected by the company, which was seeking at least US$1 billion. Flipkart held a 51%

share of all Indian smart phone shipments in 2017, overtaking Amazon India (33%). Flipkart sold

1.3 million phones in 20 hours on 21 September alone for its Big Billion Days promotion, doubling

the number sold on the first day of the event in 2016 (where it sold a total of 2.5 million phones in

five days). Flipkart Pvt Ltd.is an Indian e-commerce company based in Bengaluru, India. Founded

by Sachin Bansal and Binny Bansal in 2007, the company initially focused on book sales, before

expanding into other product categories such as consumer electronics, fashion, and lifestyle

products. The service competes primarily with Amazon's Indian subsidiary, and the domestic rival

Snapdeal as of March 2017, Flipkart held a 39.5% market share of India's e-commerce industry.

Flipkart is significantly dominant in the sale of apparel (a position that was bolstered by its

acquisitions of Myntra and Jabong.com), and was described as being "neck and neck" with

Amazon in the sale of electronics and mobile phones. Flipkart also owns PhonePe, a mobile

payments service based on the Unified Payments Interface (UPI). In August 2018, U.S.-based

retail chain Walmart acquired a 77% controlling stake in Flipkart for US$16 billion, valuing it at

$22 billion.

10
Goals of the Organization

India’s largest e-commerce firm Flipkart is running out of time to meet aggressive targets set first

by chief executive officer Binny Bansal and then by Kalyan Krishnamurthy, the representative of

Flipkart’s largest investor, Tiger Global Management, who is now effectively running the

company’s key retail and marketplace business.

11
Flipkart wants to achieve three key goals, among others, by September, according to three people

familiar with the matter. One, generate monthly gross sales of ₹ 3,700-3,800 crore by expanding

sales of smart phones, large appliances and fashion; two, achieve a net promoter score (NPS), a

key metric of customer satisfaction, of 55 partly by improving the speed and consistency of product

deliveries and improving its product returns management; and three, break even at the gross profit

level by cutting staff costs, discounts and other expenses.

12
Separately, Flipkart has also set a broader goal of generating ₹6,000 crore in monthly sales by

March, the people cited above said.On all three metrics, Flipkart is currently far behind its targets,

the people said. Monthly gross sales are estimated at roughly ₹2,000 crore; NPS is around 30 or

50, depending on how it is measured and who you speak with; and two key product categories of

mobile phones and large appliances, which together contribute more than half of Flipkart’s sales,

are in the red.

These targets exclude contributions by Flipkart’s units, Myntra and Jabong.

“Our internal numbers and targets are confidential data and as a matter of policy, we do not share

these figures externally," said a company spokesperson in an email response to Mint. According

to the company, the numbers stated by Mint were incorrect.

The idea behind the stiff targets is to get Flipkart in shape for October’s Big Billion Day which is

the most important sales event of the year for the company but also drives a hole in its finances.

Achieving these targets, or getting close to them, is seen as crucial for Flipkart in its efforts to raise

its next round of funds at a valuation it can command rather than being forced to take cash at a

distressed value.

While Flipkart is well funded for now, it will need to raise cash at some point soon to refill its

coffers. Not just that, Flipkart needs to regain the initiative it has lost in the expensive market share

13
battle with arch-rival Amazon India (Amazon Seller Services Pvt. Ltd) and at the same time, cut

losses as investors put pressure on the company to get ready for an initial public offering at some

point.

Yet, these goals are, in some ways, contradictory. If Flipkart cuts discounts, sales growth will

suffer. But if it doesn’t cut discounts, gross margins will not make the desired climb to break-even.

Flipkart’s aggressive sales goal also comes in the context of the weakest first half for online

retailers in recent memory. Because of lower spending on discounts and advertising, online retail

sales dipped to an annualized $12 billion in June, compared with $13 billion in March and $15

billion in December, according to estimates by research and advisory firm RedSeer Management

Consulting.

“Kalyan has been ruthless since returning. He’s moved people out of the business side whom he

thought were underperforming. There’s tremendous pressure now. He’s made it clear that if you

don’t perform you’ll be out. But the targets are nearly impossible.

Growth hasn’t come for a while so how are you supposed to grow double but cut costs at the same

time?" said one of the people cited above.

14
Flipkart changed its CEO in January, promoting Binny Bansal to the hot seat while Sachin Bansal

became executive chairman after a disastrous year when its big bets—a proposed app-only push,

an abrupt shift to marketplace and replacing its old leadership team in one go—backfired.

While investors expected Binny Bansal to deliver a sharp improvement in results, Flipkart’s sales

were still sluggish until June. The company did cut losses but at the cost of sales growth.

The company’s slow progress prompted Binny Bansal and the board to bring back Tiger Global’s

Krishnamurthy, who was interim finance chief and categories head at Flipkart until he left in

November 2014. Tiger Global has poured nearly $1 billion into Flipkart and the reputation of

Tiger’s Lee Fixel, Krishnamurthy’s boss, is riding on this bet.

It is now primarily up to Krishnamurthy as categories head to deliver the turnaround in results.

As part of the turnaround plan, Krishnamurthy has brought back two old hands, Amitesh Jha and

Sandeep Karwa, to business roles, the people cited above said. Jha and Karwa were among the key

leaders in Flipkart’s mobile and electronics categories in 2014 when exclusive deals with Motorola

and Xiaomi drove the company’s sky-rocketing sales growth. Jha and Karwa later moved to roles

in supply chain and product management, respectively.

15
There are four vice-presidents in charge of categories now: Jha, Adarsh Menon, Ajay Yadav, and

Rishi Vasudev.Flipkart confirmed the news. Yadav, ex-chief operating officer at The Mobile

Store, has a particularly important job: to strike exclusive deals with key smartphone brands and

turbocharge Flipkart’s growth in smartphones, the single largest and most important product

category for e-commerce companies.

In 2014, to use Binny Bansal’s words, Flipkart had “revolutionized" the business of smartphones

in India by launching the high-quality, low-cost smartphone brands of Moto and Xiaomi. These

launches not only catapulted Flipkart’s sales into the billion-dollar range but also played a big part

in driving the expansion of the overall e-commerce industry in India.

However, Flipkart ended up losing exclusivity of these brands while cash-rich Amazon India

started grabbing important exclusive partnerships, such as that with China’s OnePlus, by offering

better terms.

Now, Yadav has been charged with expanding Flipkart’s portfolio of large exclusive smartphone

deals beyond LeEco, the three people cited above said.

Krishnamurthy has also postponed Flipkart’s renewed attempt to build a private label business,

said the people. In May, Binny Bansal had proposed building a large private label business, given

the fat margins these products offer.

But Krishnamurthy has put this plan on the back burner and is instead pushing Flipkart executives

to focus on its core business. In 2014, Flipkart had poured hundreds of crores of rupees into making

and marketing Digiflip tablets, Flippd clothing and Citron home appliances but failed to build these

into top brands.

16
Krishnamurthy is also driving Flipkart’s shift back to a retail-heavy model from marketplace, said

the people cited above.

Flipkart is shifting a majority of its sales toward a few sellers and moving away from the

marketplace model, Mint reported on 5 April.

The shift is partly because Flipkart’s customer experience suffered last year when it tried moving

a majority of its business to a marketplace model. The sales on Flipkart are currently dominated

by a handful of sellers including WS Retail, a third-party seller that works closely with Flipkart

and was once owned by the Bansals. The company’s focus on improving NPS is part of its larger

efforts to improve its image with customers.

In an interview on 23 May, CEO Bansal had stressed the importance of wide product selection,

low prices and fast product delivery.

“Everyone at Flipkart now has net promoter score and customer satisfaction as their most

important metrics. NPS breaks down into what product selection is available, how fast it is

available, whether it is available all the time, and at what price. And of course, the other big focus

is on execution. E-commerce is a business where you’re selling products every day. So you need

the execution rigour to make sure that every day, we are providing the best customer experience,"

Bansal said then.

17
India's largest online retailer Flipkart has come up with a new strategy, under which it would have

some of the most-popular electronic and apparel brands creating exclusive "stores" on its

digitalmarketplace.

As of now, these digital stores can be accessed on the Flipkart mobile app, and a desktop launch

is expected to happen later. These stores help top brands target customers and drive sales by using

Flipkart’s data and analysis.

"The response till now has been encouraging," said Surojit Chatterjee, senior VP, product

management, Flipkart. The initiative already lists brands like HP, Samsung, Wildcraft, Puma,

Peter England, Bosch, Vu Technologies and @Home as its users.

18
Under the new strategy, Flipkart will create a self-service analytics platform called 'Brand Hub',

which would enable companies to target specific customer pools based on products. They will be

able to display products to specific customers based on several parameters, and in turn, customers

would follow particular brands and get notified about new collections.

"It's a way for brands to reach out in a much personalized manner while customers can discover

their favorite brands, including new launches," said Chatterjee. As per him, Flipkart has over 75

million registered users and over 50 million mobile app downloads.

India’s online retail space has in the past seen top brands objecting to heavy discounts that these

investor-backed ventures offer to customers, and this move will let them exercise control over

what they want to showcase to customers, and how they want to do it.

19
Decision Making Strategies

Merger and Acquisition are strategic tools used time to time by companies to get the cutting edge

over competitors and capturing the market. In the world of competition big fish eats small fish and

so on. The concept of acquisition and merger is always backed up by the concept of strategy

thinking and growth of the market size, international foot print of the organization. The proposed

research work focuses on the working styles of the Walmart and Flipkart, both are big giants at

their respective places both of them has acquired many companies to support their existing

business or to expand the territory of business.

Flipkart was the startup in the e-com industry for selling online goods by fellows from IIT. Flipkart

was funded by many funding giants internationally and it became an example for successful e-com

startup. Walmart is giant in the retail store with multinational presence and acquired many

companies in different regions of the world to operate and grab the market share to beat the

competition.

The case study is running around the e-commerce and commerce like online and offline market

with competitor like Amazon and others. Two players Walmart and Flipkart have their strong

position over their respective places in terms of market capture and sales other side of the coin

reflects the investors who had put their money in the venture like Tiger Global, Softbank etc. the

deal become biggest deal due to strong presence of Amazon in the game.

20
Walmart Inc. (formerly branded as Wal-Mart Stores, Inc.) is an American multinational retail

corporation that operates a chain of hypermarkets, discount department stores, and grocery stores.

Headquartered in Bentonville, Arkansas, the company was founded by Sam Walton in 1962 and

incorporated on October 31, 1969. It also owns and operates Sam's Club retail warehouses. As of

January 31, 2018, Walmart has 11,718 stores and clubs in 28 countries, operating under 59

different names.

The company operates under the name Walmart in the United States and Canada, as Walmart de

México y Centroamérica in Mexico and Central America, as ASDA in the United Kingdom, as the

Seiyu Group in Japan, and as Best Price in India. It has wholly owned operations in Argentina,

Chile, Brazil, and Canada. Walmart is the world's largest company by revenue – over US$500

billion according to Fortune Global 500 list in 2018 – as well as the largest private employer in the

world with 2.3 million employees. It is a publicly traded family-owned business, as the company

is controlled by the Walton family.

Sam Walton's heirs own over 50 percent of Walmart through their holding company, Walton

Enterprises, and through their individual holdings. Walmart was the largest U.S. grocery retailer

in 2016, and 62.3 percent of Walmart's US$478.614 billion sales came from U.S. operations.

21
What Is An Acquisition Strategy?

The acquisition strategy is a comprehensive, integrated plan developed as part of acquisition

planning activities. It describes the business, technical, and support strategies to manage program

risks and meet program objectives. The strategy guides acquisition program execution across the

entire program (or system) life cycle. It defines the relationship between the acquisition phases

and work efforts, and key program events such as decision points, reviews, contract awards, test

activities, production lot/delivery quantities, and operational deployment objectives. The strategy

evolves over time and should continuously reflect the current status and desired end point of the

program. Acquisition strategy, from a Project Management perspective, is the procurement

strategy for the components/services used in a project. There are some golden rules which can be

treated as the Strategies for Successful Merger or Acquisition Deal. Before entering in to any

merger or acquisition deal, the target company's market performance and market position is

required to be examined thoroughly so that the optimal target company can be chosen and the deal

can be finalized at a right price. This means is that you should look at a company carefully so that

you don't pay more than it's worth. In the deal of Walmart – Flipkart, it is a long term bet on the

Indian market and a step ahead from Amazon. Some strategic decisions are for long term, if we

look at the current scenario the deal is big, investors of Walmart are no so happy, there is a dip in

the stocks of Walmart after the deal. But this is not for the first time, Walmart has acquired many

organization earlier to win the game.

22
Acquisition Done By Walmart

Walmart has continuously grabbing the market share all over the world by acquiring the various

originations to mark the presence all over the world; acquisition is one of the best strategy a

company can execute. The price of the deals is less than if we compare the volume or the market

capitalization done by the Walmart. By expanding the business and acquiring the various

companies all over the world Walmart has beaten the competition. The following table shows the

various acquire organization taken over by Walmart.

The biggest success story of Indian e-commerce started from a two-bedroom apartment in

Bengaluru. On Sept. 15, 2007, Sachin Bansal and Binny Bansal (not related) started Flipkart as an

online bookstore. The two had known each other since 2005 when they attended the Indian Institute

of Technology Delhi (IIT-Delhi) together and were colleagues at Amazon briefly.

23
Eleven years later, the world’s largest retailer, Walmart, has agreed to buy a controlling stake in

the company, Softbank chief executive officer Masayoshi Son said today (May 09). Flipkart’s

journey has been nothing short of a roller-coaster ride. The company went from record-breaking

investments and an acquisition spree to failed business experiments and devaluations—only to

bounce back. Here are the key milestones in the journey of the third-mostfunded private company

in the world.

Less than six months after their momentous deal with Walmart, both co-founders

Sachin Bansal and Binny Bansal are out of Flipkart. It is a sad commentary on the hubris and the

immaturity that’s gripped India’s high-flying tech entrepreneurs.

Binny Bansal’s sudden, unceremonious exit has raised eyebrows across the entrepreneurial

ecosystem in India, particularly in the tech heartland in Bangalore. While he may have been the

24
lesser known of the two Bansals, yet when Walmart bought 77 per cent stake in Flipkart, India’s

biggest unicorn, earlier this year, they picked Binny as group CEO, and not Sachin.

Sachin ran the firm with an iron hand and was known to rub people the wrong way. Binny, on the

other hand, was affable and the hands-on operations leader. And between them, they became the

poster boys of the Indian tech start-up world. And while the $16 billion deal with Walmart ought

to have catapulted them into iconic status, yet, less than six months later, both find themselves out

of the company they co-founded back in 2007.

Since the full details weren’t in the public domain, there have been three kinds of public reactions

to Binny’s exit. One, the needle of suspicion pointed towards Walmart. That it always had plans

to take full control of Flipkart—and that Binny became a necessary roadkill in that journey. Two,

the board didn’t see him as a leader who could help them turnaround the operations—and stem the

mounting losses—and therefore there was an insidious plot to push him out of the company on

trumped up charges. Three, a few strident swadeshi activists view this as some kind of a

multinational vs desi tussle, however, misguided the thinking might sound.

So which of these versions does one believe? First, here are the facts, based on what we know so

far and my own research. Two years ago, Binny had an extra marital affair with a former employee.

The relationship went sour and there were allegations of extortion and blackmail. Binny tried to

manage the situation on his own by employing a security firm. He chose not to keep the company

25
informed, perhaps because he believed this matter was in the personal domain. But that’s not the

“serious personal misconduct” that the Walmart alludes to. We’ll come to that in a bit.

In July this year, the complainant sent a letter directly to Doug McMillion, the global CEO of

Walmart’s HQ in Bentonville, Arkansas, making allegations of sexual assault against Binny. That

prompted Walmart to ask Gibson Dunn, a global law firm to do a thorough and detailed

investigation. The investigation found that the allegations of sexual assault against Binny were

unsubstantiated and that the relationship was consensual.

But it found a serious lapse: An investigator from the security firm employed by Binny had called

the woman for a meeting and had tried to physically assault her, but she escaped. When the lady

informed him about the assault incident on email, in order to deal with a potential criminal case,

instead of responding to her, Binny employed yet another security firm to put a lid on the matter.

The second security firm tried to hammer out a monetary compensation. But it seems the lady

demanded a much higher compensation

Why this matter resurfaced again in July this year, nearly two years after the event, remains a

mystery, especially the decision to write to the Walmart global CEO. Interestingly, a copy of the

complaint was also marked to Sachin Bansal, who was apparently among the handful of people

who knew about the entire chain of events. After the Walmart takeover, the two Bansals were no

longer on talking terms.

26
When the full report of the detailed investigation was presented to him, Binny perhaps knew the

die was cast for him. The biggest issue was that he had shown poor judgement by not disclosing

the matter during the due diligence, which is usually a standard clause during such negotiations.

And for a global firm such as Walmart, this posed a grave reputational risk. And it typically treated

such matters strictly by the book. And so Binny had no option but to resign.

As it is wont to do, Walmart had to put out a statement to the stock exchanges, to prevent any class

action suits in future. (Later, the same day, however, Binny issued a statement expressing surprise

at the allegations, claiming they were unfounded.)

At the same time, Binny appears to have been given a soft landing. Despite his so-called serious

lapse of judgement, he still gets to keep his board seat. Perhaps partly because he is legally is

entitled to one, commensurate with his 4 per cent stake.

Now, let’s step back and consider the bigger picture. In May this year, when Walmart made its

move, there was plenty of hoopla and hype around the biggest exit in India’s start up ecosystem.

Even before that, the Bansals were already seen as rock stars with numerous start up awards being

conferred on them by media like confetti. Sachin’s fate was sealed immediately after the Walmart

deal was signed. He assumed that he would be given a larger role in managing the company—and

also demanded that his stake, which had been significantly diluted, be restored to a higher level.

Tiger Global and the other investors responded by easing him out.

Binny, however, didn’t exhibit the same kind of hubris. But where he slipped up badly was in

gauging the level of transparency and governance that is expected by a global strategic investor.

27
The circumstances under which the so-called tech poster boys have been eased out of the company

is clearly an embarrassment that Indian entrepreneurial ecosystem could have done without.The

decision to let go of Binny Bansal, Flipkart’s co-founder and group CEO was painful. This isn’t

how the senior team from either Walmart or Flipkart had imagined things would pan out.

Binny’s reputation was not just that of a nice guy, but also a person who could keep calm when

the pressure mounted. In turn, it allowed room for the leadership team at Flipkart under its CEO

Kalyan Krishnamurthy to operate well.

That is why when an email landed in everyone’s inbox on Tuesday, November 13, announcing

Binny would step down from his role, emotions at Flipkart ranged from disbelief to shock. No one

from the local offices at either Walmart or Flipkart had an inkling this was coming.In fact, nobody

at Walmart India’s headquarters in Gurgaon or at Flipkart’s in Bengaluru was involved in

conversations with Binny.

Newspaper reports suggest that Binny was informed about the findings of a report on Monday—

and that he articulated his shock at its contents and slammed it as unfounded. Perhaps, he was

clutching at straws. Then, a front page story in The Economic Times appeared on Wednesday. It

quoted anonymous sources and suggested not all the content in the investigation had been shared

with Binny.

28
Senior people whom we spoke to said this was untrue. Instead, they pointed to how meticulous the

investigation was. It was managed directly by Walmart’s global office, led by Judith McKenna,

CEO of Walmart International. McKenna is responsible for all of the 27 markets outside the US

where Walmart is present. She reports into Doug McMillon, the global CEO of Walmart. Not even

Walmart’s Canada and Asia head Dirk Van den Berghe, who sits on the board of Flipkart, was a

party to these conversations.

They said the full report was placed before Binny, its findings were laid out before him, and it was

made clear the facts it contained had been gathered based on conversations with key stakeholders.

Binny was specifically told where he had shown serious lapses in judgement. After hearing the

contents of the full report, there was no other option for him but to agree to resign. That said, those

in the room asked him to sign off on a communication plan.

This included a statement that would go out from Walmart announcing his exit and an email from

him as well. Walmart did the best it could to soften the blow. Those in the room saw it as a personal

29
issue that had already impacted his marriage badly. Besides, no one within Walmart and Flipkart

had any animosity towards him either. That is why the final draft of the note from Walmart went

easy on the details and simply suggested that Binny demonstrated several lapses in judgement.

The 37-year-old would be forced to leave a firm he had co-founded out of a two room apartment

in Koramangala, Bengaluru, in 2007, nearly a year before his term was slated to end.

Startups Acquired By Flipkart

India’s most funded startup has acquire many other startups in between 2007 to 2017, in the year

2018 the startup was acquired by Walmart, a retail giant. The major acquisition done by Flipkart

30
2010 weRead.com

weRead.com, which was launched in 2006, had about 3 million customers and 60 million titles by

2010. Launched as an online community of book enthusiasts by Krishna Motukuri and Harish

31
Abbot, its social cataloguing application was available on Facebook and it had members across

MySpace, Orkut, Hi5 and Bebo. It was a part of uGenie Inc., a privately held company based in

California and funded by BlueRun Ventures and Sierra Ventures. WeRead.com was the first

startup acquired by Flipkart, and instantly expanded Flipkart’s customer base to own the entire

customer book reading experience from purchase to referrals.

2011 MIME360

MIME (Manoramic International Media Exchange) 360 was a Mumbai-based digital media

distribution firm. It was incubated at the Wharton Business School’s Venture Initiation Program

32
by Sameer Nigam in 2008. The following year, Rahul Chari and Burzin Engineer joined as co-

founders. The company brought together content owners and publishers on a common platform,

enabling them to expand their market globally. It had tie-ups with about 50 content owners and 10

content publishers including Saregama and Gaana.com and operated in Mumbai, India and

Delaware, USA. This takeover enabled Flipkart to get hold of a robust infrastructure for digital

distribution technology platform.

Chakpak.com

33
Chapak.com was a content portal around films, covering Bollywood, Tamil and Telugu films, with

movie timings, news, information, and reviews. It was founded in 2007 by Gaurav Singh

Kushwaha and Nitin Rajput, with seed funding from Erasmic Ventures (now Accel Partners) and

VC firm Cannan Partners. Accel Partners was also an investor in Flipkart. In this acquisition,

Flipkart took over only rights to content – thereby adding about 40,000 filmographies, 10,000

movies and 50,000 ratings into its portal – and not the website, which continues to this day. The

acquisition allowed Flipkart to offer editorial and user-generated content for a huge array of Indian

movies.

34
2012 Letsbuy.com

Letsbuy.com was founded in 2009 by Hitesh Dhingra and Amanpreet Bajaj. It had received $6

million in venture capital funding from Helion Venture Partners, Accel Partners and Tiger Global

Management. By 2012, it primarily sold consumer electronics, communications and computer

goods, and also toys, sports and healthcare goods, watches, and stationery. Flipkart bought

Letsbuy.com in a cash-and-equity deal valued around $25 million. Both sites were backed by

common investors, Tiger Global Management and Accel Partners.

35
2014 Myntra.com

Myntra was established by Mukesh Bansal, Ashutosh Lawania and Vineet Saxena in 2007. It was

initially in the business of personalized of gift items but since 2010 had expanded into fashion and

lifestyle products. Myntra tied up with various popular brands to retail a wide range of latest

merchandise. By 2014, when Amazon was ramping up its India operations, Myntra had become

India’s leading fashion portal. In order to combat Amazon and rival Snapchat, Flipkart acquired

Myntra.com at a valuation of approximately $370 million. At that time, Flipkart co-founder and

CEO Sachin Bansal had said, “It is a 100% acquisition and going forward, we have big plans in

this segment. Flipkart and Myntra are getting together to create one of the largest e-commerce

stories and together we will dominate the market.” The move helped Flipkart strengthen its apparel

portfolio. The takeover was largely influenced by two large common shareholders, Tiger Global

and Accel Partners. Myntra continues to function and operate independently. Its co-founder and

CEO Mukesh Bansal joined Flipkart board to head the fashion business. To date it remains one of

Flipkart’s biggest acquisitions.

36
2015 AdIQuity

Adlquity was founded by Anurag Dod as a global mobile ad network to facilitate ad agencies to

acquire mobile traffic and to leverage the opportunities presented in the rapidly growing mobile

ads space. It served 25 billion ad impressions on a monthly basis for over 200 countries and had

15,000 app developers and publishers using its platform. Flipkart made this acquisition as a part

of its mobile-first strategy to strengthen its mobile platform. Appiterate Appiterate was a mobile

engagement and marketing automation company founded in 2013 by Tanuj Mendiratta, Anuj

Bhargva, Mayank Kumar and Varun Sharma. It was launched as an A/B testing tool for mobiles:

a methodology to test which of the two variant versions works better with the audience. It had

worked with e-commerce companies to target their users through push notifications and in-app

messages. With this acquisition, Flipkart aimed to deliver personalized push notifications and in-

app messages to its users.

37
FX Mart

FX Mart, founded by Amit Narang in 2012, provided services like digital or electronic payments,

remittances buying and selling of currencies, overseas remittances, travel and related services. It

also owned a prepaid wallet licence issued by Reserve Bank of India. This acquisition has enabled

Flipkart to offer a digital wallet on its app and avoid paying a cut to external wallet providers. It

can potentially help Flipkart increase the proportion of cashless transactions. Subsequently,

Flipkart launched its e-wallet in 2016. The deal with FX Mart was reportedly worth around $6

million, according to press reports

38
2016 PhonePe

PhonePe was founded by former Flipkart executives Sameer Nigam, Rahul Chari and Burzin

Engineer. The first two were also co-founders of MIME360 (which was taken over by Flipkart in

2011). It has worked on a payments solution around the Unified Payments Interface (UPI), an

initiative of the National Payments Corporation of India, which will allow fund transfer between

banks and will make inter-operability between banks and instant payments possible by using a

single identifier like the Aadhaar number or a virtual address. The company’s mission is to

significantly improve the online and offline digital payments experience for millions of Indian

39
customers. This acquisition is expected to drive Flipkart’s focus on innovation on the payments

front. While PhonePe would function as an independent business unit, its team has joined Flipkart.

Jabong.com

Jabong was founded in 2012 by Praveen Sinha, Lakshmi Potluri, and Arun Chandra Mohan as a

portal selling apparel, footwear, fashion accessories, home accessories and other fashion and

lifestyle products. In 2014, its investor, Rocket Internet merged Jabong with four other online

fashion retailers to create Global Fashion Group (GFG). Flipkart acquired Jabong through Myntra

for about $70 million from GFG, bringing into its fold over 1,500 high-street brands, sports labels,

and Indian ethnic and designer labels from over 1,000 sellers. The acquisition was expected to help

Flipkart to further penetrate into the fashion market to maintain its leadership position.

40
2017 eBay.in

Although eBay began its India operations in 2005, it had never been an aggressive player. In April

2017, while closing a $1.4 billion funding round, Flipkart acquired eBay’s India arm, eBay.in. It

is reported that in exchange for an equity stake in Flipkart, eBay has agreed to make a $500 million

cash investment in and selling its eBay.in business to Flipkart. eBay.in will continue to operate as

an independent entity. The two companies plan to tap in each other’s inventory to expand sales,

giving Flipkart access to eBay’s global marketplace. The deal may take about 90 days to close and

some of eBay’s employees may move over to Flipkart. eBay is now the most high profile name in

the list of startups acquired by Flipkart.[3] After Flipkart’s launch in the year 2007, initially with

41
the slow pace but after getting funding and starting acquisition different companies to strengthen

the market and expanding the business. Flipkart acquire many big players who started as new

venture or startups like Jabong.com, Myntra.com, and Phone Pay etc.

The Deal: Walwart And Flipkart

Walmart, the largest brick-and-mortar retailer in the world acquired a 77 percent stake in India’s

Flipkart for $16 billion, marking the beginning of its first real battle with Amazon in an emerging

market. It starts with the size of India — it’s the second-most-populous country in the world, just

behind China. Of course, that size alone doesn’t matter — rather, it’s the shifting behavior of

Indian consumers. India is home to a growing middle class, fueling household spending growth

on par with that of China — and at a faster clip than the more mature U.S. market. With a

fragmented brick-and-mortar retail market in the country, more of that spending is gravitating

42
online where the Indian shopper can purchase a wide range of products in one spot — whether on

Flipkart or Amazon. In 2017, consumers in India spent $21 billion on e-commerce, making it the

10thbiggest e-commerce market in the world, according to data from digital research firm

eMarketer. The deal, having 77 percent stake in the Indian e-com company has many reasons for

Walmart why an Indian company, Indian market, and e-commerce market. One of the strongest

reason may be presence of Amazon in the Indian market and global rival of Walmart. Walmart-

Flipkart deal would give a big push to the e-commerce market—estimated to grow from a share of

2-2.5% of the retail market to about 30% in 10 years—and thereby act like a force multiplier for

the start-up ecosystem. This deal is a good news for the future e-com market and new startups to

mark their presence in the international and national market, many startups founded and some of

them are successful, and Flipkart is one of those successful Indian startup.

Reasons For The Deal: Walmart And Flipkart

Market Strategy, Insecurity, ambition, growing Indian market etc. there are list of many possible

reasons for the deal, Walmart’s Amazon problem Walmart’s total revenue for the last fiscal was

over $500 billion, while Amazon’s net sales were $177.9 billion. Walmart showed net income of

over $20 billion, while Amazon’s net income was $3 billion. Yet, Amazon today is among the top

five companies in the world in terms of market capitalisation at over $680 billion market cap. In

fact, for a brief time this year the Seattle-based ecommerce giant was the second most valuable

company in the world, behind Apple. Analysts have also begun predicting that Amazon could beat

43
Apple to become the first company in the world with a $1 trillion market capitalisation. Walmart’s

market cap on the other hand is at just over $250 billion, not small change at all, but smaller than

Amazon’s. The reason for the stock markets in the US putting greater value in Amazon than

Walmart is because the former is seen as the company with a more robust future and growth

potential. Ecommerce accounted for 13 percent of total retail sales in the US in 2017 and 49 percent

of growth, and Amazon is responsible for most of the growth. Overall ecommerce in the US grew

at 16 percent last year. According to ecommerce business intelligence firm Internet Retailer,

Amazon accounted for over 70 percent of the $62.47 billion growth in US online retail in 2017

and almost 35 percent of the $127 billion rise in the overall retail market. Walmart has spent the

last few years playing catch-up in ecommerce. It spent $3.3 billion in late 2016 to acquire Jet.com,

a direct competitor of Amazon. Last fiscal, Walmart had ecommerce sales of $11.5 billion, a

growth of 44 percent. However, in the last quarter, ecommerce sales grew at only 23 percent, much

slower than Amazon. “In the US, Walmart is the only formidable competitor left for Amazon.

Walmart has been growing its ecommerce operations a lot and Amazon has been increasing its

footprint with physical stores. It’s natural for that battle to spill into international turf as well,”

says Kartik Hosanagar, Professor at The Wharton School of the University of Pennsylvania.

Despite the potential for growth in online retail within US, Amazon has already made big strides

in international markets. This is because the expectation is that emerging markets of today will

become growth drivers of the future. China’s Alibaba, for instance, is valued at over $520 billion,

and most US tech and ecommerce companies either missed the China bus or were kicked out. India

is the only big ecommerce market still up for grabs. India’s online retail market grew at 23 percent

in 2017. While India’s overall retail market is over $670 billion in size, online sales is just at $20

billion. The headroom for growth is immense, with 60 percent growth expected this year. Amazon

44
is already in a strong position in India with a market share of around 35 percent, compared to

Flipkart Group’s 45 percent. If Amazon extends this lead in India or builds an unassailable

position, the company will be able to extend its overall lead over Walmart dramatically. Walmart’s

India problem The Bentonville, Arkansas-based retail giant has been in India for over a decade,

but hasn’t managed to grab any share of the retail market. This is primarily because of the country’s

FDI rules in multi-brand retail. In 2011, India allowed 51 percent FDI in multi-brand retail, but

allows 100 percent FDI in the wholesale segment. Walmart had a partnership with Bharti

Enterprises, but that never scaled up and the partnership ended in 2013. Walmart still operates 21

Best Price wholesale stores in India, but has no presence in retail Ganesh, serial entrepreneur and

startup investor, says: “Walmart has consistently missed the bus. They are an iconic brand, have

the cash and the market cap, but have let others dominate the market, especially in markets other

than the US. Unless they do something drastic they will lose India too. They should have done

something like this (an investment into Flipkart) at least four years ago, but it is better late than

never. It is a desperate situation for them.”

5 things that went wrong with Flipkart

Indian e-commerce has been a playground of contradictions, with a bundle of contrasting market

data and a dash of controversial media reports. Each company has fuelled the confusion with data

on traffic, number of users and GMV.

45
Business Insider lists the 5 things that went wrong with Flipkart:

Gross Market Value (GMV) and Discounting

Deep discounts have been the biggest attraction of Indian e-retailers over the last few years, with

the focus solely being on growth. Every online retailer has spent heavily to fund discounts to win

customers. In the year that ended March 2015, the cumulative loss of Flipkart, Snapdeal and

Amazon India stood at Rs. 5,000 crores with Flipkart posting a loss of Rs. 2000 crores .

“It was pure greed. Everybody wanted a bigger piece of the market share.

This cash burn also held up GMV figures, which was considered the single most important metric

for growth. Take that away, the valuation falls, and ‘growth’ suddenly seems stagnant. However,

when you have deep pockets and big stakes, you’d want to be a whale. Problem is, when do you

stop?

In April this year, the government allowed 100% FDI in e-commerce. However, the most

disturbing feature in the policy was the bar on discounting. This has forced every player to re-

consider their business models. As a senior Flipkart official requesting anonymity puts it, “Binny’s

(Bansal) going deep into the commerce side.

High Cost Machine

While the initial race to shoot up GMV and touch a billion dollar valuation has receded, every

player is left with a high-cost machinery, with soaring operational costs.

46
Earlier this week, Flipkart co-founder and Executive Chairman Sachin Bansal hinted at a tough

financial climate. He maintained almost every Internet company around the world goes through it,

and they’ll try and raise as much capital possible, but on their own terms.

However, ShopClues co-founder Sanjay Sethi thinks the slack performance of the segment-

leaders is a factor to their current woes. “Investors are rethinking about businesses that haven’t

shown a clear path to profitability. There’s clearly a slowdown, but it’s not a long term thing”,

Sethi says.

Losing Focus

In a market as fragmented as India’s, no one brand has dominated categories like apparel and

grooming. Too much inventory stocked for too long eats away profit margins. Some say the

country's FDI policy forced these companies to portray themselves as marketplaces.

Retailing in itself has never made money, even for Wal-Mart at this scale. It’s always a 4-5%

margin. That way, the marketplace model is profitable even in Amazon’s balance sheets.

“If you decide to take fashion as a marketplace model because there are too many sellers, and a

certain brand is making more money, there’s the greed to have an inventory in the interest of better

margins. That way you build distrust among sellers”, Sethi says.

Combine huge stockpiles in warehouses, heavy discounting and 4-5% gross margins in some

categories, and you have a business that makes zero sense at unit commerce level. You can either

sell too many brands on a pure marketplace model, or select brands on an inventory model.

The Paytm founder agrees. “It’s better to leave merchandising and fashion trends to retailers. When

I see these companies building private labels, it makes me uncomfortable personally.”

47
Some steps proved costly

The idea of going app-only proved to be a big distraction for Flipkart and Myntra. Flipkart’s Big

Billion Day sale went app only last October, and reversed its decision for its Republic Day sale

this January.

Peeyush Ranjan, head of engineering at Flipkart agrees not many people install the app. "Websites

push users to install the app. But only 4% of the people actually install the app", he says.

While the company’s brave attempt to try something new must be lauded, it made little business

sense. “Companies are fighting over 2-3% market share. It made no sense to leave 10% of your

users and go app-only. That’s somebody not using the retail mindset”, Sethi says.

Flipkart still maintains it was always mobile-first, and never app-only for them, and it all got

48
misconstrued. Amar Nagaram, VP, Mobile Engineering, Flipkart says, “We never quite stopped

our efforts for mobile web. We actually pushed browser companies to offer a better experience.”

In a country with low credit card penetration, both Snapdeal and Flipkart ventured into mobile

payments a bit too late. Flipkart now has its WSR Wallet and Snapdeal made way for the

FreeCharge Wallet, but Paytm's Wallet services were way ahead. The Softbank-led company now

allows its users to book Uber rides globally, and will soon let them shop on investor.

Lure of the Market

49
Everybody agrees the fundamentals of e-commerce in India are very strong. Every other report

brings on huge growth and market size figures. True, e-commerce currently only accounts for 2%

of the total market, and there is enough room for growth.

The recent report by CIII and Deloitte India peg India’s business to consumer (B2C) segment will

grow more than seven times to $101.9 billion and the number of online shoppers will grow over

10 times to 220 million in 2020.

However, most data thrown around by e-commerce companies has been one big hogwash. App

installs don’t count for traffic, number of active users doesn’t count for real transactions, and high

GMV doesn’t count for profits. That’s why Flipkart’s 50 million app installs must be taken

withapinchofsalt.

“If only Snapdeal and Flipkart tone down their expectations, they could build fabulous businesses”,

Retail Consultancy firm Technopak MD Arvind Singhal says.

50
Objective of the study

Each industry makes its own goals and decision making strategies for its growth and expansion.

These strategies are made keeping in to consideration all the internal (employees, stake holders,

financial conditions) and external (customers, competitors) factors. These strategies directly help

the industry to increase the demand for its customer product which then helps increase the sales.

These strategies could be decision making strategies, promotional strategies, pricing strategies,

distribution strategies etc.

Since, Flipkart is India's largest online retailer, thus through this study I want to know its goals

and decision making strategies used by the industry to distribute its products on the basis of

customers buying behavior and its impact on other online retail industries..

51
Conclusion

The findings in the paper show that there are many significant factors that together make up the

goals and decision making strategies of the industry. Customers’ perception towards a brand is

built largely on the satisfactory value the user receives after paying for the product and the benefits

the user looks for. In the above study, a large portion of the user is satisfied from the Flipkart

services.. It may be because of many services that industry offers to its customers.

It may be due to ability of the services to cure the problem. The satisfaction brings in the retention

of customer. Flipkart is enjoying the advantageous position in market through its timely services.

However, it should not ignore the competitors like Amazon, Snepdeal etc. Flipkart in order to

retain more customers and satisfy them , must fulfill the claims made by the industry before any

other industry may mushroom up and take away the benefits of the industry.

52
Bibliography

I have taken the information to make this file from the various

sources :-

# https://www.scribd.com

# https://en.m.wikipedia.org/wiki/marketing_management

# https://www.EduRev.com

53

Potrebbero piacerti anche