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E- Commerce Challenges: a Case Study of Flipkart. Com Versus Amazon. In RESEARCH PAPER Management Volume : 5 | Issue : 2 | Feb 2015 | ISSN - 2249-555X E- Commerce Challenges: A Case Study of Flipkart. com Versus Amazon. in KEYWORDS E-tailing, E-Commerce, Online Shopping DR KEYURKUMAR M DR. PRITI NIGAM DR PARIMAL H. VYAS NAYAK Professor of Commerce and Assistant Professor, Department Business Management, Department of Commerce and Business Director, Laxmi Institute of of Commerce and Business Management Faculty of Commerce Management, Sarigam Management, Faculty of Commerce The Maharaja Sayajirao University of The Maharaja Sayajirao University of Baroda, Vadodara [Gujarat] 39 0002 Baroda, Vadodara [Gujarat] 39 0002 ABSTRACT Information Technology [IT] has transformed the way people work. By integrating various online infor- mation management tools using Internet, various innovative companies have set up systems for taking customer orders, facilitate making of payments, customer service, collection of marketing data, and online feedback respectively. These activities have collectively known as e-commerce or Internet commerce. India has an Internet user base of about 250.2 Million as of June 2014. The penetration of e-commerce is low compared to markets like the United States. India's e-commerce market was worth about $3.8 Billion in 2009, it went up to $12.6 Billion in the year 2013. Flipkart & Amazon are the two big players of e-commerce in India. An attempt has been made to critically examine various corporate and business level strategies of two big e-tailers that is Flipkart and Amazon considering their e-commerce challenges, business model, funding and revenue generation, growth and survival strategies, Shoppers’ online shopping experience, value added differentiation, and product offering made by them along with evaluation of the challenge which both of them had faced in October 2014.A big question arises, who will win this game at the end in India? Who will be the real winner? The unpretentiousand obvious answer should be of course, ‘Indian Customer’. Prologue: processing information. As new wave of industrial revolution taking place, many economists, management experts, and organization theo- Major concentration of electronic commerce is to facili- rists has contracted that the world has left the old indus- tate the generations to exploits the business opportuni- trial age, and has entered into a new third wave of an ties coming on their way. Indeed, e-commerce has evolved information age. As Professor Tom Canon has stated that from online billboards to a fully functional, personalized ‘The new industrial revolution that surrounds us requires shopping experience over the past decade. While there profound change in the way we consider enterprise, devel- were admittedly a few bumps along the road, the path op our businesses, the way we manage and the structures from 1994 through the 2004 holiday shopping season is within which we manage’. Information and Information full of crucial milestones of Internet pioneers and technol- Technology [IT] are key drivers of this age. Information and ogy innovators. technology are critical to manage change and are distin- guish features of the Information Age. Globalization of the In the beginning, the Internet was characterized by slow marketplace and means of accessing through national and dial-up connections and online billboards. Netscape came global superhighways have given a new dimension to the on the scene in the year 1994 with its point-and-click concept of information. Web browser that opened the door to the billion-dollar revenues e-tailers enjoy today. India has an internet user Origin and Growth of e-Commerce: base of about 250.2 Million as of June 2014. The penetra- The new economic era witnessed a new technology known tion of e-commerce is low compared to markets like the as digital economy. Information Technology has trans- United States and the United Kingdom but is growing at formed the way people work. By integrating various online a much faster rate with a large number of new entrants. information management tools through the Internet, vari- The industry consensus is that growth is at an inflection ous innovative companies set up systems for taking cus- point. Unique to India and potentially to other developing tomer orders, payments, customer service, collection of countries, cash on delivery is a preferred payment method. marketing data, and online feedback. These activities have India has a vibrant cash economy as a result of which 80 collectively known as e-commerce or Internet commerce. per cent of Indian e-commerce tends to be Cash on Deliv- By adoptinge-commerce practices, these companies have ery (COD).However, COD may harm e-commerce business boosted their profits, net worth, and have permanently in India in the long run, and there is a need to make a altered competitive dynamics.Electronic Commerce (e- shift towards online payment mechanisms. Similarly, direct commerce) has unleashed yet another revolution which imports constitute a large component of online sales. has changed the way businesses buy and sell products and services over computer networks, e-commerce helps tra- Demand for international consumer products including ditional commerce through new ways of transferring and long-tailitemsis growing much faster than in-country supply 332 X INDIAN JOURNAL OF APPLIED RESEARCH RESEARCH PAPER Volume : 5 | Issue : 2 | Feb 2015 | ISSN - 2249-555X from authorized distributors and e-commerce offerings. breaking services like Cash on Delivery (COD), 30 Day re- placement Guarantee, EMI options, Flipkart mobile app, Market Size and Growth of e-Commerce in India: etc. India’s e-commerce market was worth about $3.8 Billion in the year 2009, it went up to $12.6 Billion in 2013. In the History & Growth of Amazon. In: year 2013, the e-retail market was worth US$ 2.3 Billion. Amazon.com, founded by Jeff Bezos in 1994, is an Ameri- About 70 per cent of India’s e-commerce market is travel- can electronic commerce company with headquarters in related. India has close to 10 Million online shoppers, and Seattle, Washington. Jeff Bezos incorporated the company is growing at an estimated 30 per cent CAGR vis-à-vis a as “Cadabra” on July 5, 1994, and the site went online as global growth rate of 8 to 10per cent.It also includes busy Amazon.com in 1995. Bezos changed the name cadabra. lifestyles, urban traffic congestion and lack of time for of- com to amazon.com because it sounded too much like ca- fline shopping; lower prices compared to brick and mortar daver. Additionally, a name beginning with “A” was pref- retail driven by disintermediation and reduced inventory erential due to the probability it would occur at the top and real estate costs; increased usage of online classified of any list that was alphabetized. It is the largest Internet- sites, with more consumer buying and selling second-hand based company in the United States. Amazon.com started goods; evolution of the online marketplace model with as an online bookstore, but soon diversified, selling DVDs, websites like Jabong.com, Flipkart, Snap deal, and Infi- VHSs, CDs, video and MP3Downloads/Streaming, Soft- beam respectively. ware, Video Games, Electronics, Apparel, Furniture, Food, Toys, and Jewellery. The company also produces consumer According to Report by Avendus Capital, entitled “India electronicsnotably, Kindle, Fire Tablets, Fire TV and Phone Goes Digital”, the Indian e-tailing industry is estimated to and is a major provider of cloud computing services. grow to Rs 53,000 Crores ($11.8 Billion) in the year 2015. On 7th March 2014, e-tailer Flipkart claimed that it has hit Amazon has separate retail websites for United States, $1 Billion in sales, a feat it has managed to achieve before United Kingdom & Ireland, France, Canada, Germany, The its own target (2015). Netherlands, Italy, Spain, Australia, Brazil, Japan, China, India and Mexico, with sites for Sri Lanka and South East A report recently published by the Boston Consulting Asian countries coming soon. Amazon also offers interna- Group also stated that online retail in India could be an tional shipping to certain other countries for some of its $84Billion industry by the year 2016 more than 10 times its products. In the year 2011, it had professed an intention worth of the year 2010. to launch its websites in Poland, and Sweden. Flipkart & Amazon are the two big players of e-com- In early June 2013, Amazon.com had launched their Ama- merce scenario: zon India marketplace without any marketing campaigns. It has mainly covered following. In July, 2013, Amazon had announced to invest $2 Billion (Rs 12,000 Crores) in India to expand business, after its History & Growth of Flipkart.com: largest Indian rival Flipkart too had announced to invest$1 It is an e-Commerce companyfounded in the year 2007, Billion. by Mr. Sachin Bansal and Binny Bansalboth alumni of the Indian Institute of Technology, Delhi. They had been work- Business Model and Market Share, Financial and Rev- ing for Amazon.com previously. It operates exclusively in enue Generation: Flipkart.com&Amazon. In: India, where it is headquartered in Bangalore, Karnataka. The business model used by this e-retailers are ‘Invento- It is registered in Singapore, and owned by a Singapore- ry-Led Model’ [FLIPKART]and ‘Marketplace Model’ [AMA- based holding company. Flipkart has launched its own ZON] respectively. product range under the name “DigiFlip”, Flipkart also re- cently launched its own range of personal healthcare and Flipkart started its operation with inventory led model. In- home appliances under the brand “Citron”. During its ini- ventory-led model requires huge investment in warehouse tial years, Flipkart focused only on books, and soon as it and logistics, Now, Flipkart.com e-commerce websites are expanded, it started offering other products like electronic using mix of both the models. Flipkart started its operation goods, air conditioners, air coolers, stationery supplies and with books, but soon it started adding more categories.
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