A look into Flipkart’s Big Billion day and the aftermath of reaction to follow.
In light of the recent Big Billion day sale held by Flipkart (one of Indias largest online retailers), there are so many little lessons to learn from India’s thriving retail space. Here are a few of my thoughts on all the players illustrated through a metaphor of sports.
Forwards / Strikers: E-Commerce (Flipkart, Amazon, Snapdeal)
While on the offensive these 3 have almost certainly helped most Indians stock up early on the Diwali gifts for friends and family. With unprecedented discounts, unlimited buzz and having already acquired the trust and loyalty of customers the big3 of the ecommerce space made a mark. Flipkart is said to have clocked $100 million worth of single day sales (not small money in a third world country)!
A friend managing a digital sales channel of a computer retailer recently told me that if he had put out an ad similar to the BBD sale for his company, they would have had him fired (knowing the amount of traffic it will generate and the capability of their servers). Obviously Flipkart didn’t feel the same despite the warning signs earlier this year with the increasing demand for a single product “Xiaomi Mi3” phone which led to downtime on their servers. Imagine the same strategy followed for their entire catalog.. and what you get is a lot of “sorry internal server error” messages and a bunch of impatient and frustrated customers!
As someone who has spent a number of years in retail I’m aware of the tricks employed to persuade customers. Pricing strategy is always hiked just before a sale and then cancelled to show a larger discount and make the customer feel better about saving his money. That strategy CANNOT work in the online place where customers are too educated and spend enough time watching the product that even a slight fluctuation in the price will not go unnoticed. Flipkart goofed up big time on this front and possibly caused the biggest dent to their reputation. Losing the trust of many consumers even if it is just temporary will hurt Flipkart as “Trust” is the foundation stone of e-commerce.
The apology letter from the Bansals shows that they realized this mistake and is a great step in the right direction (something I don’t see any Brick and mortar owner ever doing).
Defenders: Brick & Mortar (Retailers & vendors)
Online sales are 1-2% of the estimated $500 billion retail business in the country, but growing rapidly. While the top consumer goods companies such as Samsung, LG and Sony get nearly 95% of their sales from the traditional brick-and-mortar stores, the demand in the online world is growing at breakneck speed.
The following are quotes from some of the very frustrated retailers & vendors in the aftermath of BBD:
Sony, Samsung & LG suspended sales at Flipkart and are considering legal action for what they termed as “predatory pricing”
“How can someone sell products below its manufacturing price? This is legally not allowed in the country. Someone can do such undercutting only to destroy competition. Just because they have foreign funding, they can’t kill local trade like that,” said a furious Kishore Biyani, founder of Future Group to Economic Times.
Obviously affected like everyone else in the retail space, some of these players might have a point. However to customers it is just a case of sour grapes and what benefits one need not benefit all.
Let’s take the cell phone market for example, companies like Motorola, Asus & Xiaomi have benefited a great deal from their partnership with Flipkart which has resulted in a rising market share for all 3 brands in a very crowded and competitive mobile marketplace. Samsung once dominant in this filed should instead be looking at how they can re-engineer their products so that they offer the value they once did to the customers.
In similar fashion Future Group once known as the pioneer of Big day sales in retail (which used to cannibalize market share from smaller Kirana shops) should re-look at how they can strategize and adapt for the future. After all they opened http://www.futurebazaar.com years before Flipkart but couldn’t capitalize on the early start simply because they believed one formula was more superior to the other.
During my time at Future Group I remember one of Kishore Biyani’s favourite quotes “There is only one person who can fire everyone from the CEO downwards. The Customer!” –Wise words indeed!
The customer is truly king!! And in an economy driven by value Indian customers know how to spot it and don’t care about anything else in between.
**The opinions described here are my own and do not in anyway reflect those of my employers past, present or future. They are only to serve as an online thought provoking catalog of ideas & inspiration.