CONSUMER SERVICE INNOVATION OF FLIPKART

Flipkart is innovating to redefine customer experience

Ranjith Boyanapalli, Vice President of Product at Flipkart proclaims that it’s been an unwritten
rule of business for India’s largest e-commerce company that economics comes only second to
customer experience.

“At Flipkart, we’re obsessed with innovating to ensure the best in class customer experience which
is the key differentiator that helps Flipkart stay on top. We sift through vast amounts of data and
research every day to learn about our customers, listen to them, understand their pain points and
alleviate them. Besides, customer focused group discussions keep happening at Flipkart,” states
Ranjith Boyanapalli, Vice President of Product at Flipkart

Flipkart has introduced several industry-first initiatives for its customers. It was the first online
retailer to come up with Cash on Delivery (COD), an innovation in payments that ushered e-
commerce and helped build trust among customers for shopping online.
Marking another industry first, Flipkart offered PREXO (Product Exchange) Program where the
customer is able to get a good price for his old mobile phone, large appliance or laptops against
the purchase or a new device in the same category. This reduces the average price of purchase for
the customer by 10 to 30% based on the condition and life of the old device and demand for the
same allowing for customers to buy phones with better specifications at a higher price point than
it would have been possible in the past. “Phones were getting updated in about 12 months, so we
realized that we should offer an exchange program because consumers are willing to sell their
phones in 12 months at most. We used our technology capabilities and launched easy product
exchange, wherein customers are given full value for their old goods which are immediately
exchanged with a new product,” he says
The valuation of the product is done online and then it is exchanged when the new product is
delivered, making the process seamless. Easy product exchange has not only fulfilled a unique
Indian need but also made new products more affordable for Indians.

No Cost EMI

Another novel offering to the customer is the No Cost EMI where there is no interest cost for an
EMI charged to the customer ensuring the customer can have a longer repayment tenure and also
be able to make more purchases.

The No Cost EMI entails zero processing fee, zero down payment and zero interest for
customers. Unlike offline offerings, where customers have to make a down payment and pay a
processing fee to avail interest-free schemes, Flipkart’s offering has no such hidden costs. This
move by Flipkart goes a long way in making high-value products like smartphones, TVs,
refrigerators affordable to a large section of Indians.

Assured Buy Back Program

On May 10, 2017, Flipkart launched the Assured Buy Back Program. This is a first in the online
market in India where on the purchase of this policy with the mobile phone the consumer is
guaranteed an exchange price for the phone at the end of fixed tenures. At the end of the policy
tenure, the customer gets a guaranteed price by exchange the device on the purchase of the new
device on Flipkart.

Flipkart is a preferred destination for mobile customers. Over the last few years, the number of
customers who upgrade their phones more frequently on Flipkart has gone up due to the lower
cost of ownership. A Buy Back Guarantee offering on the phone re-enforces the reliability and
quality of the brand for the customer and also ensures that the customer is able to upgrade his
phone at the end of his policy tenure.

The Assured Buy Back Program reduces the long-term cost of ownership of the mobile phone by
protecting the customer against technology disruptions as the customer is guaranteed an
exchange price at the end of his tenure on the purchase or new phone irrespective of the demand
of that brand or specifications at the time of upgrade.

The lower cost of ownership allows the customer to upgrade to better specification phones and a
higher frequency. The buyback guarantee also ensures that the customer can experiment with
newer brands in the market that he has not used before

“In our most recent Big 10 sale, we saw 70 percent of all smartphone buyers opt for at least one
of the three offerings (No Cost EMI, Guaranteed buyback and product exchange), helping
increase the average selling price of smartphones by as much as 25 per cent to Rs 12,000 from
Rs 8,000-9,000 during the five-day long sale that ended on May 18,”he reveals.

“For the recently launched Buy Back Guarantee Offering we saw as high as 10% adoption for
some of the models on which this offer was made. For washing machines and refrigerators, we
saw two out of ten customers opting for exchange which reduced the price of their purchases
between 12-15 percent,” he adds.

Role of Machine Learning and AI

Machine Learning and AI are driving innovation in customer experience. Flipkart has more than
100 million registered users. “We analyze the customer’s preference of brand and price ranges
and personalize the overall shopping experience for him. Machine learning and data modeling
will play an instrumental role over the next 20 to 24 months, as we create multiple ways for
personalized discovery and shopping experience for Flipkart customers. In addition, we are
launching chatbots, which will help us drive a two-way conversation with the customer, helping
them refine their query or find an answer in an expedited manner. We use Natural Language
Processing (NLP) for Chatbots, where we constantly learn from every customer interaction that
we have. So we are going to bet on artificial intelligence and machine learning in a big way,” he
shares.

Machine Learning can handle scale much better, faster and much cheaper. AI is much better than
manual efforts to improve both quality and efficiency of review. Flipkart has launched AI for all
quality of reviews. “It helps us understand how much does the review actually help other people
take a better buying decision. For example, when you are talking about the camera you are
talking about the resolution, the zoom, the quality of photo etc. or is the review talking about
how Flipkart delivery is so fast for you. So this is figuring out the relevance and authenticity of
who wrote it. We have seen significant improvements in our review quality and how it helps
customers post launching this,” says Boyanapalli.

Flipkart has launched chat as a channel for Flipkart customers to seek help using customer
support on their app. Chat helps them gather all the information through automated means which
goes a long way in understanding the customer profile, the context of the orders that he has and
his query. Flipkart is experimenting with a chatbot to start an interaction, resolve the query and
close the interaction by itself without a need to actually bring in the manual agent.
Flipkart's next big innovation for Indian e-commerce
Flipkart recently launched Flipkart First, a seemingly innocuous subscription service for its
customers. The subscription policies are simple enough – you pay INR 500/- per annum and in
return, receive free shipping of orders, ensure in-a-day guaranteed delivery, get 50% off on same
day delivery (INR 70/-) and get priority customer care. The fine print gives a few more features –
these services are only valid for products owned by the seller WS Retail (which was earlier a
Flipkart entity but had to be separated due to FEMA regulations) and for specific PIN codes of
India, Further, what ‘priority customer care’ means is not quantified – does it mean that I get to
wait 50% less? Or that there is no waiting? Or that this is going to be handled by a separate team?
What’s the big deal?

We are willing to bet that this small announcement is going to be the first step in a series of big
innovations in Indian e-commerce sector in the coming months. This subscription service is
nothing but a ‘customer loyalty program’ modified for e-commerce. If you have been a member
of frequent flyer programs of airlines, or have a discount card for Lifestyle or Big Bazaar, then
you have experienced a flavour of loyalty programs. In those industries, you either end up getting
points which can be redeemed for other products, or you get to use the points as a discount on your
next purchase. But in e-commerce, where the buying patterns are very different and the margins
are wafer thin, the companies cannot afford to give away money or points.

Is it another marketing gimmick that is a revenue stream? Or is there a deeper value to the
company? Quick calculations reveal that if a user ends up ordering same delivery by paying INR
140/- thrice in a year, he would have derived full value for the money paid for this Flipkart First
 program. Any additional same day delivery purchases and all the other features are clearly
additional benefits to the user. So Flipkart cannot be making much margins out of this plan. There
are other indirect reasons why they have started this program:

 Customer Data: Obtain deeper customer data than is possible from a normal registered user.
Further, many users simply check out as guests without bothering to register. This brings even
those users into the loop, providing better insights into buying behaviour
 Loyalty Helps: With brand loyalties in Indian e-commerce in a constant state of flux as per user
surveys, any inkling of loyalty that can get a user back to the site for purchases, earns brownie
points
 Same Day Delivery: By all accounts, same day delivery volumes have not reached a critical
volume by city and hence they cost a lot more than the charged INR 140/- That means the e-
commerce sites are making losses on those transactions. If such buyers are brought under this
scheme, the losses incurred can be controlled to some degree
 Prevent ‘Sticker Shock’: Various studies have shown that shopping cart abandonments have been
on the rise, and one of the major reasons for this is what is known as the ‘sticker shock’, where
users get shocked when they see the final price in the cart after adding taxes, shipping charges and
other costs. So when shipping charges need not be shown in the cart, it is a psychological way to
provide a feel-good scenario for the buyers.