Marketing Management

Flipkart: Grappling with product rules

Submitted by –

Group 6(Section B)

Atul Singh [19A2HP424]

Abhirajsingh Rathod [19A2HP466]
Aman Sah [19A1HP044]
Parth Gupta [19A3HP656]
Siddharth Singh [19A1HP055]
Summary

Flipkart, the E-Commerce Company of the year at golden carts award in 2016, was founded in October 2007
by Sachin Bansal and Binny Bansal, Ex- Amazon employees. With the initial fund of $6000, they started
selling books at an online platform in India. The company was registered in Singapore due to capped foreign
investments in retail companies FDI (Foreign Direct Investment) norms in India. By 2016, Flipkart has
successfully started selling 30 million products across more than 70 categories. It received major
investments of up to 10 million from Tiger Global Management. To connect Buyers and Sellers online,
Flipkart created a market place model which also saved them from holding any stock.

In 2014 and 2016, Flipkart acquired Myntra and Jabong. It faced many issues and challenges and one of them
was regarding the trust of customers with online transaction, which led Flipkart to go on with Cash-on-
Delivery. Flipkart also increased its commission fees by an average 5%, leading to an online protect by the
sellers against them. These sellers removed their product from the list and made their account inactive. Due
to this an “Out Of Stock” message was shown to the buyers and which became stake to their reputation.
Companies like Amazon India saw an opportunity. To attack the flipkart customer and dissatisfied sellers,
Amazon reduced its rate on various products categories by 2% to 7%. Flipkart did not register any profits
since 2007, it hit a massive drop in its valuation and were not able to retain the market share they once had.

1. What are the various reasons that customers may give for returning products?

Majority of the users ,as much as 55%, were of the age group 15-24. Some of them used to do
unplanned and casual purchases and later returned the products. Some replaced the original
products with cheap replicas before returning the product. The reason for return of the products
were varied. Some said they don’t need the product anymore. In other cases, the consumer said that
they deliberately ordered an extra size of wearable items, so that they can keep the one that fits
them best and return the other. In some cases, the return was because of difference in the actual
product and what the consumer expected.
2. How does a return policy affect consumers’ buying choices? What are the different types of return
policy leniency that business may offer?

Online retail market had its own challenges as customers were accustomed to brick and mortar
shops. Brick and mortar shop gave customers complete information including touch, fit, quality of
the products, which was something that online retail markets lacked. So , the online retailers came
up with Return Policies, helping the customer return the products if need be. The customers, over a
period of time, started exploiting these return policies, which was a problem that needed to be dealt
with by the online retailers. We can take the affect return policies have on customer and divide the
policies into Strict and Lenient Return Policies.

Strict Return Policies:

Buyers buy cautiously, and they fear product might be defective and won’t be
returned.

They will refrain from buying wearables due to size and fit issues. Ultimately they
might switch back to traditional shopping.

Lenient Return Policies:

Buyers buy carelessly without any plan to keep the product with them.

They buy multiple sizes of the same product and return the ones not needed.

They misused the return policy for unethical practices , like returning the
product after use.

From Exhibit 7 we observe that Flipkart has a more lenient return policy, compared to Amazon and
Snapdeal. Thus leading to a greater misuse of return and refund policies by customers.
3. What measures can Flipkart take to reduce the high number of returns?

The measures that Flipkart can take could be similar to the ones taken by other platforms. Stricter
return policies, similar to that of Snapdeal, like a 7 day return policy with proper documents from
the vendor for electronics and in general a 7 day policy across all products. A mandate on quality
check before approval of return/refund should be in place and approval should be given after
confirmation of the defect. There should be a checklist, with things to check before a return is
approved, this can prove to be an affective damage control method. “Return subjet to Seller’s return
Policy” should be introduced for products that have the highest return policy misuse rates. This
would solve the Seller dissatisfaction issue and reduce Flipkart’s answerability to sellers.

4. How should Flipkart deal with its sellers in the short and long term in order to retain them?

Short Term:

1. Offer quick and easy payment terms: Flipkart and can facilitate the payment process by
reducing the payment window period to seller after dispatching the order.
2. Make seller centric policies: From Exhibit 4 we observe that the changes in the new policies
were not very viable to the sellers as the commission was increased to 15% on average, the
fixed fees was also increased to 15% (on an average) and the fixed fees was also increased
substantially. The company can reduce the marketplace fee like commission, fixed and
shipping fee. Thereby making policies beneficial to the sellers.
3. Incentivize the sellers: Offer extra rewards to seller on completing certain number of
successful deliveries.
4. Easy pickup and delivery: Flipkart can smoothen its pickup and delivery of products by
increasing the pickup hubs, delivery personnel and proving services at a minimal cost.

Long Term:

1. Interact with seller: Flipkart should increase its seller engagement program and make the
sellers feel more valued. It should organize workshops to train sellers with the latest online
trends.
2. Capital Assistance: Flipkart can provide sellers with financial assistance by giving them
access to capital at competitive rates, zero collateral and quick turnaround time which will
ultimately help sellers in building brand image.