First of all, hats off to all the team members of Flipkart who would have been working non-stop for this Big Billion Day Sale day and to all the backend and logistics team who have to work day and night to ship more than 6 lakh orders. Big Bazaar, which is the big daddy of Indian retail industry have been successfully running Maha Bachat sale in the month of august for more than 10 years. They also started with 1 day sale and later transitioned to 6 day event after realizing that 1 day sale do give you lot of publicity, but if you are able to serve only a small fraction of shoppers, then the rest of the shoppers really get frustrated.
Here are my observations on Flipkart Big Billion Day Sale:-
Lesson not learnt fully from Xiaomi Mi 3 Sale: Flipkart site crashed many times during Xiaomi Mi-3 sale because of huge demand of product. Traffic for the same was limited to those who wanted to buy mobile phones. After seeing the “Sold Out” sign for the mobile phone, majority would have left the site as the sale ends with it. So the sale was for very short duration.
After first few Xiaomi Mi 3 sale which lasted for seconds to minute only, people got really frustrated and were all over the social media complaining about it. Flipkart was then compared with irctc ticket booking experience, in-fact I would say that irctc without the best talent of the country is doing a decent job. Flipkart is the most trusted brand in E-commerce in India, and any such backlash which happens after a flash sale can dent the image.
Compare Xiaomi Mi-3 sale with a full day sale of Flipkart Big billion day sale, with a nationwide campaign, offers across several categories leading to massive traffic throughout the day. This also resulted in massive number of disappointed people.
Vision was not correct: Never heard of any sale in India which was named after the sales target of the day. Most of the sale events are named on what user would get from it and not what seller will get from it. So the sale name “Flipkart Big billion day” was not named appropriately and hence the focus was misplaced. All the preparation was around how to sell more. High value products were chosen so that the transaction size is more for achieving the target.
Sachin Bansal(founder:Flipkart) told this sale is aimed to get more people to E-Commerce.Really? Although this sale created lot of buzz around it, but the way it was executed has proved that this is not the right way of increasing user base. Imagine millions of first time customers coming on the Flipkart and seeing the site down, offers going out in milli-seconds and slow site. It’s good to see couple of products at unbelievable prices, but then probability of getting the product is like winning the lottery or winning 7 crores in KBC. It will be hard for people to believe whether those prices were for real and whether they have enough quantity of those products. On Sale day, there was no Cancellation or refund policy. Along with replacement, easy return and refunds are the important aspects for the first time buyer’s. People like flipkart because of its service which includes fast shipping and easy return/replacement/refund.
Flipkart website issues: All kind of errors surfaced on the site including site unavailability. Three of the error messages are in the images below. Is this the image flipkart want to be associated with? Apart from this normal/loyal users who were not interested in the sale, also faced lot of issues in completing the orders on that day.
Billion hits! But how many users? Flipkart claimed to have billion hits on the flipkart website. But, does this number make any sense unless we know how many unique users visited. As the offers were going out of stock quickly, people visited the site multiple times in a day and during every visit pressed the refresh button several times. Only 15% (19-20 crore) of the India population has access to internet. So this statistics of 100 crore clicks does not make any sense.
Was this sale for the humans or for machines?: In the first attempt, I was able to select the product and add it to the cart. Once I proceeded to the checkout window, it asked to confirm the shipping address. After this the confirm address button stopped working. It would have been a matter of 2-3 seconds out of which most of it was consumed in page load time. In Second attempt for a different product, Product was added in the cart but the price of the product was changed to no-discount. In third attempt, the product disappeared from the cart itself. Once the product is added to the cart and we get the confirm-address button, then the probability of that transaction completing should be high. But no matter in which phase of the transaction you were, transaction was aborted by flipkart.
More than 6 lakh orders. What about the delivery? While products like Xiaomi or Motorola phones would have been distributed across multiple locations before this sale for quick delivery, but still It would be a huge task to deliver all the items on time. India has a limited logistics supply chain with limited amount of space in airlines, train and on Road transport which always run with 80-90% of utilization. All the e-commerce companies rely a lot on big logistics companies like Fedex, Blue-Dart and Gati. Problem is not only the flipkart orders, but it is the orders from all the major e-commerce companies like Amazon, Snapdeal , ebay etc which saw the huge volume on this day. Snapdeal reported more than 10 times increase in the sale during this day.Huge number of orders will choke the logistics supply for several days during this peak Diwali season. Because of this, there will be more damaged shipments in transit, more lost shipments and huge number of orders which will miss the delivery deadlines.
Snapdeal site fared better than Flipkart: Snapdeal has been doing Snapdeal savings day for a very long time and has a better experience in managing such sales day. Although Snapdeal volume would have been much lower than the Flipkart, but still Snapdeal site did reasonably well as compared to the Flipkart. There was a huge traffic which after getting disappointed from Flipkart moved to other sites like Flipkart, Amazon etc.
Orders worth 600 crores: Almost half of it will be with couple of brands. Xiaomi sold some 1,50,000 phones worth 110 crores(125000 redmi and 25000 mi3). It would have sold the same on any other day on Flipkart also. Motorola which has some exclusive launches with the Flipkart, My guesstimate is that it would have sold Motorola phones worth more than 200 crores.
Economics of Sale
Flipkart is a platform for selling products online and has more than 10,000 sellers. Flipkart itself cannot sell its own products directly as it has received the FDI funding which is not applicable for B2C(Direct retail. Applicable for Wholesale or indirect sales). Flipkart get a percentage of any transaction which happens on its portal. There are multiple ways in which it will get paid for the discount offered on the sale day:-
- Flipkart earn with every transaction: A day having more than 10 times sales as compared to normal day would mean more earning for Flipkart naturally. Like the sale which happens in chains like Big Bazaar, Easy day or Reliance retail which offer huge discount on only 5% of the products, Flipkart also offered the discount on select products. So even on a Sales day there would have been good sale of non-discounted products.
- This sale will result in addition of new users to a big set of existing users. These new users will in future make further transactions. E.g. If this sale resulted in increase of net base of customer by 10%, then it would earn additional 10% sales in the coming months which comes out to be a big number. So if the currently monthly sale is 1000 crore then there is a possibility to do additional 100 crores of sale from this month onwards. It would backfire if the sale results in reduction of user base.
- New users with registered email will now get the deal mails regularly from flipkart resulting in sales increase.
- Discount from Sellers: Some sellers would have agreed to give discounts from their margin to customer.
- Advertisement on Website: Flipkart gave space for advertisement on the home page as well as on other pages. Makemytrip.com and wearyourshine.com are some of the portals which advertised on the portal. Kenstar launched the OxyFryer with flipkart taking space on home page.
- Exclusive launches means more margin/profit: Exclusive launches from Motorola and Xiaomi means more margin and hence more profitability. By launching exclusively on Flipkart these mobile companies are saving lot of money which they would have spent on advertising and handling the distributors across the country. E.g. a Mobile phone which company sells it to first distributor for 6,000 ultimately get sold on the retail shops for 9,000 (approx) as there are lot of middlemen involved in each sale. While using platform like Flipkart, they can sell the same product for Rs6,000 directly to the customer on such days.
- Brands sell older/outdated products at huge discount: Those companies which are going to launch new products sell the old products on huge discount so that the inventory is flushed from the sellers/company to generate cash for new products. Samsung sold the Tab-2 which was launched 2 years back at 1/10th of its original price, although quantity is not known. Similarly before the launch of Iphone 6, Apple sold Iphone-5s at huge discount.
What could have improved the user experience
- Clarity on the quantity available for sale: Except for the Xiaomi, Quantity for other products on discount was not disclosed. Being the #1 site in India, More transparency from Flipkart would have helped in making it more trustworthy.
- Minimum discount on all products: There was no minimum discount set on all the products. In many cases a product having the MRP of Rs 1000 is sold at the half price for few seconds and then again price is reverted to Rs 1000. A minimum discount of let’s say 5% would have attracted more users to continue shopping for other products instead of leaving flipkart after disappointment.
- Price increase before the sale day: Lot of users complained about the increase in the selling price of the product on the sale day in order to show more discount. Flipkart could have ensured that seller do not increase the rate couple of days prior to and on the sale day. This is applicable especially for private label products where the MRP is set by the seller itself.
- More discount is not always helpful: Selling product at 1/10th of price helps in attracting more number of users, But in order to reduce number of disappointed users, It would be good to sell the same product at let’s say half or 1/5th of the price but with increased quantity.
- Push versus Pull: Most of the users have to do frequent refresh in order to check whether the new deal has come. This would have resulted in huge load on servers. An approach could have used where new deals are pushed to the already opened page. Or another option would be to use the same way which Twitter use to indicate the user that new tweets are available on the open twitter page.
- More user engagement on pages other than home-page: Offers were available mostly on the home page. So once user clicks on some offer it lands to the product page. But on that product page if the product is sold out, there was nothing else to keep the user engaged, no suitable related offers were displayed on the page. Consider this with the following retail store analogy:-
On a big sale day in a retail supermarket store, people go with the trolley/cart to a section according to the need. Once they get or do not get the things they want in that particular section, they are attracted towards other offers in that area. And then they slowly navigate and shop to different parts of the store filling the trolley. If the flipkart example had to be applied here, people would go from main gate to a particular section of the store on seeing the offers on the main display of the store. Then if they get or do not get the product they return back to the main gate to see more offers which are displayed only on the main gate. User has to repeat this process which made him frustrated
- Timing and Predictability: While the sale started at 8 AM, It was not clear when the items of a particular category will come on sale. For example those looking for offers on let’s say kids product did not know when the offer will come. So they have to check the site again and again creating frustration and load on server. This could have been avoided by having a clear time slots assigned for sale in specific category. e.g. slots like 8 to 9 (Mobile), 9 to 10(Clothing) and so on. Or smaller slots of 10 minutes. People love surprises but equally love predictability.
- Geographical Distribution of Offers: To cater high volume of traffic, different offers could have been displayed in different geographical areas at the same time. Thus dividing the number of contenders for each offer and increasing the conversion rate for consumers.
- Going for multiple day sale format instead of one big day: Instead of going for 1 day sale, having multiple day sale format help in traffic distribution and makes it possible for the users to access the site according to the convenient time.
- Better and clear communication : When people are in hurry, they might not notice the change of price after they have clicked on the “Buy” button. User need to be intimated about such changes probably with some colour coding to get proper user attention on the change. A better way to inform the non-availability of the product should be devised while the transaction is in progress.
It would be unfair to compare Amazon with Flipkart
Amazon was founded in 1994 and had the revenue of US$ 74 billion in 2013. Flipkart is quite new and was founded in 2007.Its 2013-2014(FY) revenue was around US$ 98 million. Having been started with a small investment of 40 lakhs, Flipkart has played the most important role till date in making the E-Commerce a reality in India. We need to have faith in Flipkart(Sachin Bansal and Binny Bansal) and Snapdeal(Kunal Bahl and Rohit Bansal) founders/entrepreneurs who are competing with some of the biggest international e-commerce companies and big offline retail players, by giving them enough time and chances to correct their mistakes.