The explicit SWOT analysis of Flipkart sheds light on the strengths, shortcomings, opportunities, and hazards to the company. This in-depth analysis will give you straightforward data about the major factors of the company and its market position at present.
About Flipkart
Flipkart company is the brainchild of previous Amazon employees Binny Bansal and Sachin Bansal. It started as a small online bookstore and has now transformed into a huge marketplace having an extensive range of services and products.
Flipkart has now become a very familiar name in India and has a hold of over 30% market share as per a recent report in the Indian e-commerce market. The company is well known across the globe and renowned giant Walmart acquired its majority stake of 77% taking the value of Flipkart at around 20 billion US dollars.
The company has been instrumental in offering high customer satisfaction and innovative business strategies consistently. Flipkart has the vision to make online shopping easily accessible to everyone with its famous slogan – ‘ Ab Har Wish Hogi Puri’. The company has an unwavering vision to offer the best-in-class shopping experience for its customers with high affordability, convenience, and quality.
SWOT Analysis of Flipkart
So, let us start with the SWOT analysis of Flipkart talking about its weaknesses, strengths, opportunities, and threats in detail.
Strengths of Flipkart
Below are the major strengths of Flipkart that keep it positioned as the E-Commerce leader in India.
High Brand Reputation
Flipkart is a very well-known brand in the Indian e-commerce sector having a very strong brand image. The company is one of the most authorized online retailers in the nation. As per a recent report, Flipkart’s value in 2022 was around $40 billion.
Sturdy Market Position
Flipkart has a market share of around 30% as one of the biggest e-commerce companies in India. The company is truly committed to offering quality products on-time delivery and outstanding customer service that has helped it positioned as a trusted company.
Creative Marketing Campaigns
Flipkart has been instrumental in developing creative marketing campaigns among its competitors. The company has made use of different marketing channels including television and print media to promote and showcase its brand products. The very well-known ‘Big Billion Days’ campaign was one of the most significant campaigns run by Flipkart and contributed hugely to the profit of the company.
Moreover, for specific segments, the company has been launching marketing campaigns. These campaigns include the fashion industry as well with its tagline ‘India ka fashion capital’.
All these efforts help the company create a very strong emotional connection between the company and help the company create a very strong emotional connection between the company and its customers.
Strong financial and customer base
Today most of the successful investors are providing a strong backing to Flipkart. These investors include Softbank, Walmart, etc. These giant companies help Flipkart get access to further expansion and growth.
Also, Flipkart has a very loyal customer base having more than 250 million active registered users. It helps the company to serve various groups of customers along with innovative purchasing experiences.
Easy purchasing
Today, customers don’t need to visit the store in person. They can just shop online through the applications. With the online platform, users can easily scan and buy things as per their time and comfort. As per the recent survey conducted, it has been concluded that around 50% of the abroad online shoppers have witnessed overpaying for a particular purchase.
In this scenario, Flipkart has transformed this trend by offering a smooth buying experience with its interactive mobile and website applications. This unique approach enabled the company to stand out from the rest of the Indian e-commerce competitors.
Strong supply chain operations
Flipkart has been offering the fastest delivery in the e-commerce industry as it has a very strong supply chain. The company holds its logistic arm called ‘Ekart’ which has elevated this service level. Having more than 2500 delivery hubs and 12000 delivery executives, Ekart has created a very extensive network that allows Flipkart to deliver more than 9 million shipments every month throughout India.
Even in the highest altitude post office in the Himalayas, the Flipkart service has been very seamless, and within a few minutes of the order being placed, the customers would get the delivery.
At present, he covers over 95% of most of the serviceable area pin codes in the country. With its strong logistics and supply chain capacities, the company is very well-positioned to continue being the exceptional leader in the Indian e-commerce industry.
Weaknesses of Flipkart
Below are the weaknesses of Flipkart including heavy cash burn, dependency on discounts, and much more.
Heavy Cash Burn
Flipkart has been consistently spending more revenue than it is generating due to its heavy investments in infrastructure logistics and marketing.
As per the filings revealed recently, the company has burnt around $3.8 billion in the year 2022. However, its earnings were $3.6 billion in 2021.
Regulatory & legal issues
Flipkart has confronted some regulatory and legal challenges including tax clashes, antitrust probes, as well as, alleged foreign investment violation rules. This made the company pay hefty fines and tarnished the company’s image in the market industry.
Additionally, the violation of foreign investment laws has imposed a penalty of around 1.35 million Indian rupees by India’s financial crime agency.
Low-profit margin business models
The main weakness of Flipkart is its low-profit margin business model which is highlighted by most industry analysts and exports. Respective of being a leader in the e-commerce industry having a high sales of 500 billion Indian rupees, the profitability of the company has been badly hampered by the business model it is working on.
Opportunities for Flipkart
Below are the opportunities for Flipkart in the e-commerce industry with details.
Continuously increasing e-commerce market
The eCommerce market in India is witnessing high growth and expansion and is predicted to get a high value of around $300 billion by 2030. This high increase is due to the rise in internet usage and growing preference for online shopping. Since it is a major player in the Indian eCommerce industry, the company is about to take advantage of this growth potential and sees the opportunities offered by the expanding market.
Persistent acquisition
The company has been performing acquisitions like Cleartrip, Upstream, Aditya Birla Fashion and Retail, etc. This offers high levels of synergy benefits to the company. These acquisitions offer Flipkart the chance to truly capitalize on the gaming travel pricing and retail segments. By integrating all these startups into the existing platform, the company can develop a very innovative and distinctive customer experience by retaining at a highly competitive edge in the industry.
Increased smartphone usage
The usage of smartphones in India is increasing, which offers a significant opportunity for the company. This has shown a sheer strength in smartphone sales of the company. Approx 1 billion smartphone users in India could be seen by 2026. In this scenario, Flipkart can take advantage of its strong distribution network as well as collaborations with the leading smartphone companies to gain a big share of the market sales in the smartphone sector.
New Market Expansion
Flipkart is a very established company dominating the Indian e-commerce market. Still, it has a very good opportunity to expand its horizons across the Middle East, Asia, and Africa. The said areas are witnessing a high demand for online shopping that opens doors to Flipkart where the company can also expand its customer base.
Big Billion Days
This campaign offers a great opportunity for the company to create this by leveraging psychological concepts like high discounts. A few years back, Flipkart witnessed a high number of users with approx. 1 million users per second during the sale. The concept of Big Billion Days has made a home in Indian consumers’ minds and this campaign is now very well known for launching exclusive products and attractive deals.
Threats to Flipkart
Following are the threats explained in detail to Flipkart.
Selling counterfeit products
Flipkart has been facing criticism as the company has been used to sell counterfeit products. This is causing a loss of trust in customers and Flipkart is being referred to by a few names like ‘Fraudkart’.
It is very important to consider that Flipkart is not selling fake products itself but the third-party registered sellers are using this platform to sell fake products. This is a significant threat to the company and is damaging its reputation causing a sharp fall in customer loyalty.
Commission fees
Flipkart charges high commission fees which is another risk to the market position of the company. As per the reports, Flipkart charges commission from 10 to 25%, making it very difficult for small sellers to maintain their business standards. Hence, Flipkart should review its strategies and highly consider different business models to stay competitive in the market.
Indian government regulations
Unlike other countries, the government regulations of India implement new regulations on E-Commerce Industries like restricting product discounts. This poses a notable danger to the company’s functional processes. This requires navigating the regulations carefully to increase its growth in the highly regulated Indian commerce market.
Intense competition
The company is facing high competition from different E-Commerce websites like Myntra, ShopClues, Amazon, etc. This has given a powerful hazard to the company’s financial growth and market share as well.
Top Competitors of Flipkart
Here are the top 5 competitors of Flipkart in the industry.
- Amazon India: Amazon India is very keen on offering robust customer services, effective network delivery, and a wide product range that makes it an obvious competitor to Flipkart in the Indian e-commerce industry.
- Snapdeal: This company offers a very wide range of products at very competitive prices and attracts customers of different choices and value deals. But Snapdeal faces some challenges in getting up a position against its rivals.
- Paytm Mall: Paytm is widely popular due to its digital wallet facility. Paytm Mall offers a very smooth shopping experience with its appealing cashback discounts and incentives. This poses a very strong threat to Flipkart in the mobile commerce industry.
- Myntra: Myntra is highly focused on lifestyle and fashion products with its exclusive partnerships, innovative collections, and customized shopping experiences to attract the audience. This is one of the giant rivals of the Flipkart fashion element.
- ShopClues: ShopClues focuses on budget-conscious customers and offers a different range of products at cheap prices. The company faces some scalability concerns as well as challenges in customer service when compared to the larger competitors like Flipkart, Amazon, etc.
Failed Campaigns of Flipkart
Let us see the detailed breakdown of the field campaigns of Flipkart one by one.
‘Big Billion Day’ bugs
Flipkart highly predicted a Big Billion Day sale in 2014 was aimed to compete with ‘Black Friday’. But this day was completely spoiled by technical bugs, inventory mismanagement, and crashed servers across the network. In this scenario, customers faced a lot of frustration as popular items sold out very quickly and later on were available at very inflated prices. This led to widespread criticism of Flipkart’s reputation in the market.
eBay India acquisition
In 2017 eBay India acquisition by Flipkart had an aim to strengthen its market position against its rival Amazon. But this strategy failed and made a huge impact on the Flipkart market share as well as annual revenue. A lot of challenges related to integrations if competition etc led to eBay India’s final shutdown in 2018. This proved a bad investment for Flipkart.
Snapdeal investment
In 2017 Flipkart had also planned to acquire Snapdeal to consolidate its market position. But again the deal failed amid internal clashes, regulatory hurdles, and some disagreements over pricing. Irrespective of continuous negotiation, the acquisition failed with Snapdeal and Snapdeal decided to move on an independent path.
Nearby shutdown
Flipkart had also planned to get into the hyperlocal grocery delivery with Nearby having a number of challenges to face. This included intense competition from big shots in the market including Big Basket, Grofers, etc. Additional factors like operational complications, managing inventory, and making on-time deliveries proved to be very difficult things for the company. Gradually, Flipkart decided to close Nearby in 2016.
Conclusion
Flipkart has established its strong brand image in the market with its very impressive strategies. The company has successfully positioned itself as unique from its competitors with its truly amazing discounts and on-time delivery services.
The company has revolutionized the Indian E-Commerce industry and has been assistant to expanded services. The company has got more than 25% of its share in the e-commerce industry and its sales growth is estimated to be more than 30%. The company is sharply committed to innovating and satisfying customers consistently while leading the industry for the next many years.
To wrap up, it is necessary to understand that Flipkart sells experiences and not just products. It is a platform full of convenience, affordability, and trust for the customers. The success roars in the case of Flipkart with its more than 150 million registered users and over 10 million shipments getting delivered every month.