Abstract
This article provides an in-depth analysis of the Flipkart’s business strategies. The analysis covers internal and external environmental factors that determine the company’s competitive positioning. Flipkart management and other ecommerce companies may find the article useful to learn about the emerging market trends. Strategic management researchers, teachers, students and policy makers can also read the article to gain insights into India’s ecommerce industry.
1. Introduction
Flipkart is India’s #1 ecommerce platform. In 2022, it earned #161 rank in global marketplace category. With net worth of around $40 billion (2023), the company has achieved rapid growth in recent years.
This article presents an in-depth analysis of Flipkart’s business strategies. SWOT analysis of Flipkart reveals key internal and external environmental factors that determine the company’s competitive position in Indian ecommerce market.
2. Company overview
Here is a brief overview of Flipkart Company:
| Company name | Flipkart Internet Pvt. Ltd |
| Parent company | Walmart Inc. |
| Year founded | 2007 |
| Headquarters | Bengaluru, India |
| Industry | Ecommerce |
| CEO | Kalyan Krishnamurthy |
| Number of countries | 200 countries in partnership with eBay |
| Flipkart revenue 2022 | INR 511 billion |
| Flipkart brand value 2022 | $40 billion |
| Flipkart competitors 2023 | Amazon, Reliance and Snap-Deal |
3. Flipkart SWOT Analysis
Flipkart SWOT analysis identifies key strengths, weaknesses, opportunities and threats that reside in company’s internal and external business environment:
3.1. Flipkart Strengths
Flipkart Group (Flipkart, Myntra and Shopsy) holds market leadership position in Indian ecommerce market with 48% of the market share. The company recorded 1.6x faster growth in first three months of 2023 than the e-commerce industry. Amazon precedes with 47% market share.
3.1.2. Large customer base
As per Times of India, Flipkart already has a large customer base of 200 million active users (+350 million registered users), and company plans to add 300 million more active customers in coming years.
3.1.3. Flipkart revenue growth
Flipkart has shown strong revenue growth from 2014 ($0.35 billion) to 2022 ($6.30 billion), as depicted in following graph:
Source: Startup Talky
3.1.4. Strong competitive positioning
Flipkart holds strong competitive positioning than Amazon in India. Following table shows how Flipkart has an overall edge over Amazon.
| Competitive factors | Amazon | Flipkart |
| Number of sellers 2022 | 205,884 | 420,000 |
| Number of registered users | Above 100 million | Above 350 million |
| Number of unique products | +50 million | +80 million |
| Market share 2022 | 47% | 48% |
| Revenue 2022 | 215 billion Indian Rupees | 511 billion Indian Rupees |
3.1.5. Brand value and latest rankings
In 2022, Flipkart recorded the brand value of around $37.6 billion. Following table shows the Flipkart’s latest ranking in different areas:
| Category rank 2023 | #1 |
| LinkedIn most preferred workplace in India 2019 | #1 |
| Country rank 2023 | #14 |
| Global rank 2023 | #161 |
3.1.6. Gross merchandise value
Flipkart has highest gross merchandise value (total products sold in a set timeframe) in Indian ecommerce industry, as shown in following graph:
Source: Statista
3.1.7. Marketing capabilities
Flipkart has developed innovative marketing capabilities. The company has successfully launched many marketing campaigns that delivered an attractive ROI, and spread wide WOM about the brand. Some examples of Flipkart’s highly successful marketing campaigns are-
• Big Billion Days (Walmart’s overall sales rose by 13.3%).
• India ka Fashion Capital (boosted brand awareness, particularly among young shoppers).
• Munna Bhai and Circuit (enhanced brand connectivity to target population).
3.1.8. Walmart Flipkart deal
• SWOT analysis of Walmart Flipkart deal suggests that this deal delivered the significant value to both- Walmart and Flipkart.
• The acquisition deal enabled the Flipkart to give tough competition to e-commerce tech giant- Amazon.
• The combination of Walmart sourcing and Flipkart’s ecommerce capabilities could be a global play, and not mere an Indian play- says a former Snap Deal executive.
3.1.9. Flipkart Myntra deal
• Another successful strategic deal of Flipkart was with Myntra.
• Flipkart Myntra deal SWOT analysis suggests that although, the deal was expensive (Flipkart had to invest Rs. 2000 crore); but it has the potential to expand the Flipkart’s presence in online fashion industry.
• There is no potential threat that Flipkart may face, and the deal is a win-win situation for both companies.
3.1.10. High customer growth in tier 3 cities
Flipkart is recording 47% year-on-year growth in tier 3 cities. Its fashion category recorded 9.4x growth, and its fashion customer base grew by 3.5x. In 2021, Flipkart wholesale fashion category expanded its reach from 8 to 1,715 cities.
3.1.11. Tech-enabled supply chain network
• Flipkart has a wide network of suppliers, particularly in the tier 2 and tier 3 cities, which makes it #1 ecommerce platform in India.
• Flipkart’s tech enabled supply chain network enables the company to deliver more than 100 million shipments each month- Hindustan Times reports.
• The robotics and automation at fulfilment centers enhance the order processing speed and efficiency, enabling the company to serve millions of customers.
3.1.12. Ekart and Kirana delivery
Flipkart has its own logistics arm- Ekart with more than 3000 delivery hubs. It also has Kirana delivery program, which accounts for 30% of its 100 million monthly shipments.
3.2. Flipkart Weaknesses
3.2.1. Surging loss
Although, Flipkart has recorded high revenue growth, but the business remained unable to make profit in financial years 2021 and 2022:
Source: Inc42.com
As shown in above graph, Flipkart’s operating revenue grew by 1.3X, but total loss grew by 1.5X from 2021 to 2022, showing net loss.
3.2.2. Unstable profit growth
In connection with above, Flipkart has been showing an unstable profit growth from 2014 to 2021:
Source: Statista
The high fluctuations in profitability creates an uncertainty about company’s financial performance.
3.2.3. Excessive reliance on home market
Flipkart excessively relies on its home market. Around 95% of its website traffic originates from India, and only 5% comes from outside India:
Source: Statista
Whereas, its competitor Amazon gets traffic from around the world, as shown in following graph:
Source: Statista
Flipkart’s excessive reliance on home market increases its vulnerability to the local market conditions.
3.2.4. Excessive reliance on the promotional discounts
Flipkart offers frequent discounts in an effort to boost the sales. This business practice is reducing the Flipkart’s gross margin. As a result, the company reports heavy losses despite revenue growth.
3.2.5. Heavy dependence on the advertising
Flipkart heavily depends on the advertising to handle the competitive pressure. It further increases the operating expenses, and makes its business model less profitable. In 2021, Flipkart spent Rs 1073.4 crore on promotional and advertising expenses, showing a rise from Rs. 1115 crore in 2020.
3.2.6. Management churn at top
Flipkart is currently dealing with high churn at top management. Frequent management changes creates an environment of uncertainty. The management reshuffling continues ahead of its planned IPO.
3.2.7. Ineffective business model
Although, Flipkart is the market leader, however, its business model is hampering the company’s profitability. As per Economic Times, Flipkart’s low profitability model worries the sellers, and causes heavy losses due to thin operating margin.
3.2.8. Poor customer experience
One of the key weaknesses of Flipkart is its poor customer service. Although, Flipkart has a well-designed website with attractive aesthetics, and engaging content and offers. However, key issues lie in its post-purchase customer service. Customers frequently face issues with Flipkart due to unclear exchange and return policies, warranty issues, and affiliate marketing refunds.
3.2.9. Return fee
Due to high product return rate, Flipkart has started charging the return fee, which is creating customer dissatisfaction.
3.3. Flipkart Opportunities
3.3.1. Going public
Flipkart will apply for its initial public offering by the mid of 2023. Due to booming online healthcare and travel booking segment, Flipkart has re-set its IPO valuation from $50 billion to $60 to $70 billion. The Flipkart’s decision to go public will unlock significant value for its parent company- Walmart.
3.3.2. Projected Ecommerce revenue growth in India
Indian ecommerce market is projected to grow from $50 billion in 2022 to around $120 to $140 by 2026:
Source: The Economic Times
As shown in above figure, the mobile phone segment will record the strongest growth, followed by electronics, home, fashion, and groceries segments. It represents high growth opportunity to Flipkart in mobile phone segment.
3.3.3. Friendly national retail policy
Indian government has announced its retail policy to meet the nation’s ecommerce needs. The policy focuses on ease of doing retail business, retail digitization, open networking of digital commerce, and rationalization of the licensing process.
3.3.4. Funding opportunities
Current business environment is offering new funding opportunities to Flipkart. In 2021, Flipkart reported that it successfully raised the new funds (worth $3.6 billion) from diverse sources, including- funds from parent company, private equities and sovereign funds.
3.3.5. Expansion in Asian-Pacific ecommerce market
Asian-Pacific ecommerce market will grow to $6,146 billion by the end of 2028:
Source: Data Bridge Market Research
Flipkart can expand its operations in emerging Asian Pacific ecommerce market to fuel the business growth. Other than Asia, Middle Eastern and African retail markets are also booming. Click here to know more.
3.3.6. Growing tech-savviness
Indian people are getting more tech-savvy, particularly in the post-pandemic world. A report by Deloitte revealed that India will be having 1 billion smartphone users by 2026. Growing smartphone penetration, and increasing interest in online shopping present growth opportunities to the ecommerce companies.
3.3.7. Drone delivery
There is a consistent rise in the drone delivery in India, as shown in following graph:
Source: Statista
Considering this trend, Flipkart is planning to invest on the drone-based logistics and transportation for quick and efficient service delivery.
3.4. Flipkart Threats
3.4.1. Global market turmoil
The global market turmoil caused by Russia-Ukraine war has affected the Flipkart. Reuter’s internal sources revealed that the company delayed its IPO due to prevailing global political uncertainty.
3.4.2. Regulatory challenges
Indian regulatory environment is getting challenging for e-commerce platforms like Flipkart and Amazon. New regulations prohibit ecommerce companies from hosting flash sales, and limit their growth of private labels.
3.4.3. Anti-trust probe
Currently, Flipkart is on trial of anti-competitive practices. As per Reuters, Indian Supreme court probed both- Flipkart and Amazon over their anti-competitive business practices. Anti-trust probe has put the ecommerce giant on regulators’ radar.
3.4.4. High return rate in India
Product return rate in India is significantly higher than USA, as shown in following graph:
Source: Rest-of-World
High return rate raises the operating costs of ecommerce platforms, and threatens their profitability.
3.4.5. High threat of new entrants
Although, Indian government’s support for digitization is making business environment friendlier in ecommerce sector, but digitization initiatives (like Umang, Bharat interface for money and Start—up India portal) raise the threat of new entrants by reducing the entry barriers.
3.4.6. Growing competition from existing players
• Flipkart and Amazon are two largest ecommerce platforms in India, while reliance is the distant third. However, Reliance is the only ecommerce business with around 7% EBITDA, whereas, Amazon and FlipKart have negative EBITDA. Reliance’s profitable business model threatens other two ecommerce giants.
• Meesho is another existing player that is giving tough competition to Amazon and Flipkart. Both Amazon and Flipkart charge minimum 2% commission fee. Whereas, Meesho charges 0% commission from suppliers across all categories.
3.4.7. Counterfeit products
Flipkart is struggling with the counterfeit products, which is hampering the customers’ trust, and is damaging the Flipkart’s reputation. The dissatisfied customers often call Flipkart as #Fake Kart, or #Fraud Kart over different social networking sites. Such comments damage the company’s reputation, and negatively affect Flipkart’s brand image.
Key points covered in SWOT analysis of Flipkart are summarized below:
4. Flipkart Walmart SWOT Analysis – Summary
SWOT analysis Flipkart
| Flipkart Strengths • Market leadership • Strong financial health • Marketing capabilities • Successful strategic acquisitions and deals • Growth in tier3 cities • Tech-enabled supply chain network | Flipkart Weaknesses • Surging loss and unstable profit growth • Dependence on home market • Dependence on promotional discounts and advertising • Management churn • Ineffective business model • Poor customer experience • High return fee |
| Flipkart Opportunities • IPO and funding opportunities • Ecommerce industry growth • National retail policy • Expansion in Asian-Pacific ecommerce market • Growing tech-savvy nature • Drone delivery | Flipkart Threats • Global market turmoil • Regulatory challenges • Anti-trust probe • High product return rate in India • High threat of new entrants • Growing competition from existing players • Counterfeit products |
SWOT analysis for Flipkart provides basis for following recommendations:
5. Recommendations based on Flipkart SWOT Analysis
• Expand operations in the Asian Pacific market
• Invest on the robotics, automation and drone technology to enhance operational efficiency
• Revisit business model to make it more profitable
• Enhance customer experience by improving post-sale services
• Proactively handle the customers’ concerns towards the counterfeit products
• Expand presence in the online fashion segment
• Expand penetration in tier 3 cities
6. Flipkart SWOT Analysis Conclusion
To sum up, Flipkart hold strong presence in Indian ecommerce market. However, the intensifying competition from new and existing players along with challenging regulatory environment is making business environment tough for Flipkart.
Click here to read about the Flipkart marketing strategy.
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