Key Features of Business Model:

Flipkart started its operation with the inventory led model, which required huge investment in warehouse and logistics, however it has changed the model and it is using both inventory led and market place models. Flipkart has taken the full benefit of the increase in the internet users in India in the recent years. The internet users in India are the 2nd highest in its region behind China. The internet users in India are mainly the people between the ages from 30-35 and Flipkart has targeted that segment of the population. The e-commerce market in India has also the trend of high growth 57% during the next few years.
One of the key features of the business model is the COD model. It was an important development as the customers were hesitant to pay the money online through the credit cards and the number of customers increased rapidly after the deployment of this model. The model became so popular that the 40% of the sales in 2012 were being done on the COD basis. Another reason to implement this model was the internet connection problem in India where the average speed of internet is not more than 1 mbps. Flipkart also joined with India Post to extend its reach to remote areas and also to provide the COD facility through India Post.
The huge competition in pricing made many companies unable to run their businesses, however Flipkart after realizing that the only way of improving the business than other business to differentiate in the service improved its service to satisfy the customers. Flipkart adopted the customer service and satisfaction as its unique value proposition. The discount feature introduced by the Flipkart is another key feature of its business model. The services that are offered by Flipkart include the excellent collection of the items, high quality packaging and very prompt delivery, installment payment options, 30 day replacement policy. These features helped Flipkart in acquiring the new customers who would check the Flipkart before buying anything they need ranging from books to television sets to laptops. The free delivery model on the purchase of any item, which was worth more than 500 Indian rupees, helped Flipkart in becoming the popular e-tail destination. (Dr Priti Nigam, 2015)

Creating Shareholders Value:

The current objective of Flipkart to build the scale and profitability is not the immediate goal, like Amazon did where they built the scale and created the value through expanding the market and grabbing the market share superseded profitability. The current objective of Flipkart is to focus on the annual growth of 100% to 200% and it will only look for profitability when the industry will mature and annual rates of growth will be diminished to 30% to 40%. Once the company achieves the huge market share, then its costs such as delivery cost will reduce as the delivery will take several orders and save the cost.
The company is also looking to cut back on the steep discounts that it uses to gain more customers to its site as the market will settle down soon. However, it would be the key for company to keep penetrating the growing market of e-tailing and make barrier of threats through the services, which will be unable for other competitors to offer. (Dr Priti Nigam, 2015)(ET Bureau, 2013)

Valuation Multiples:

Flipkart raised $200 in 2013 through the existing investors in a deal that marked the single largest round of funding for an Indian e-commerce company and provided it enough to run for another four years with these funds. The deal valued Flipkart at $1.5 million. There have been questions raised on the logic behind these valuation numbers, which have not been seen before in India. Flipkart is making loss and even though it is considering going public, however it doesn’t seem to be close to actually going public....................

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