CHAPTER -1

Introduction

1.1 Overview to e-retailing

Electronic retailing is also called as e-tailing or internet retailing in

which the retailer and consumer communicate through an electronic
medium which is known as internet , consumers can order
merchandise directly over an interactive or by cell phones . In India
e-retailing is unknown to many , but with government’s open
attitude towards progression ,lot of infrastructure is dedicated to
this area . Whereas the internet users is growing at higher rate it
would be useful for consumers as well as the companies to discuss
e-retailing , secured payment methods and future benefits of e-
retailing. E-retailing is selling of products and services over
internet , E-tailing can include business to business (B2B) and
business to consumer (B2C) sales of products and services .
Retailing online is cost-effective method helps in fast launch ,
quicker reach in market areas and operating costs is less in
comparison , better interaction with customers . With the help of
Internet it has become easy to find products with lower costs and
they don’t have to make efforts to walk to a store. The rapid growth
of world with on-click-shopping forces retailers to lay new policies
for capturing new customers , for attracting new customers and
maintaining rapport with old customers ,retailers have to satisfy
their customers. Every retailer have to maintain good brand
image ,for success of online retailing customers have to be faithful
towards the organization . E-retailers can facilitate their customers
with brand awareness , product customization and cash discounts .
In India Non-store retailing represented by direct selling and e-
tailing is estimated at Rs 1,100 crores . Only 19 % of all retailers
have Nan e-retailing initiative .The number of retailers in this
country with e-retail plans in one year is almost equal to number of
those retailers with no plans . 10% of retailers have discontinued
their e-retailing initiative ,main reasons behind this are non-viability
of resources and resource constraints .It is estimated that 5% or
more of retail stores of goods and services such as electronics,
apparel ,banking , books , computer software & hardware, sporting
goods ,toys will be made online .

In some cases of products & services electronic retailers might even

be able to provide better information than store retailers , there are
many buying situations where electronic retailers can provide
sufficient information ,even through products has touch and feel
attributes .

Internet can serve one or more of these roles for a retailer

 Project retail presence.

 Generate sales as major source of income for online retailer
or as complementary source of revenue for a store-based
retailer
 Enhance retailer’s identity .
 Reach geographically dispersed consumers including foreign
ones .
 Provide knowledge to consumers about the products
carried, store locations, answers to customer queries,
customer loyalty points and so on.
 Promote new products and fully explain and demonstrate their
features.
 Be more consumer friendly by letting them point and click on
subject they choose.
 Conduct a retail business in a cost efficient manner.
 Obtain customer feedback.
 Give special offers and cash backs to web customers.
 Present book of accounts to potential investors, potential
franchisees and the media.
 Furnish customer services in forms of E-mail , “hot links” and
other communications.

1.2 Benefits &Limitations to e-retailing

 Benefits to E-retailing in India :

1. No investment in infrastructure is required: E-retailers

don’t need to maintain expensive stores in prime
locations as they operate to the websites and thus save
drastically on the real estate cost which is the biggest
cost in the involved. Beside this, the maintenance cost
of a virtual store as compared to physical store is much
less .

2. Transaction is simple as its one click away : On the

Internet , product information is just few clicks away, all
accessed in the comfort of a home .Traditional retailing
is totally vice versa where the consumer searches, runs
up and down, grills a pporly trained store assistant who
is unable to help him out . In simple words shopping on
the internet saves our precious time and efforts .

3. Better interaction with the customers : E-retailing is a

transaction where by retailer comes in direct contact
with customer thus increasing their interaction for
betterment . Interactions refer to the ability of
researching customers on an individual basis and react
appropriately to responses of individual customers
.According to a research agency , 82% of the online
buyers have been found to be satisfied with their
purchases.

4. Easier for customers to locate your business: With

multiple available search engines, customers ,may have
an easier time in locating the business . In lesser time
from any part of the world the customers could avail
benefits of service offered by e-retailer.

 Limitations to E-retailing in India :

1. Problems with the payment system: People in India are not

used to online shopping system moreover the online payment
system through the credit card is also totally alien to them.
Most of them do not avail of the transaction facilities offered
by credit cards. They are also dubious regarding the online
 payment system through credit cards. Hence different
payment options should be made available to them.

2. Problems with shipping: The customers using online shopping

channel should be assured that products they have ordered
would reach them in due time . For this the retail companies
have resorted to private guaranteed courier services as
compared to postal services.

3. Offline presence : The customers should be assured that the

online retailers are not only available online but offline as
well . This gives them the psychological comfort that these
companies can be relied upon .

4. Products offered at a discounted rates: The cost retailers save

on the cost of building and employee salaries . Some part of this
benefit should also be enjoyed by the online customers by a
reduction in the price of the product. The customers by a
reduction in the price of the product. The customers should be
conveyed this message that they are getting the products at a
discounted rates.

5. Language problem: Most internet retail shops use English as their

mode of communication. English may not be comprehensible
to the majority of the Indian population .To increase the
customer base, content in the online retail shops should be
provided in local language .

1.3 COMPANY PROFILE (FLIPKART)

Flipkart is an e-commerce headquartered in Bangalore Karnataka .It

was founded by Sachin Bansal and Binny Bansal in 2007 both
alumni of the Indian Institute of Delhi .They worked for [Link]
before quitting and founding their own company . They both were
solid coders and wanted to open a portal that compared different e-
commerce websites , but there were hardly any such sites in India
and they decided to give birth to their own e-commerce venture –
[Link].
Thus was born Flipkart in Oct 2007 with an initial investment of 4
lakhs . It was never going to be easy since India has a bad past
experience with e-commerce trading . It was not an easy segment
to break into, people were very particular in paying money for
something which they had not seen and received. The trust was
missing in the Indian consumers. So what flipkart had to do was to
build trust and faith in their customers .And they did the same later.

Initially they used word of mouth marketing to popularize their

company .Flipkart began with selling books, since books are easy to
procure , target market which reads books in abundance , books
provide more margin , are easy to pack and deliver , do not get
damaged in transit and most importantly books are not very
expensive , so the amount of money a customer has to spend to try
out ones service is quite minimal .Flipkart sold only books for first
two years .A few months later , the company sold its first book on
[Link] _John Woods“Leaving Microsoft to Change the World ”

Flipkart started with consignment model i.e they had ties with two
distributors in Bangalore , whenever a customer ordered a book ,
they used to personally procure book from the dealer , pack the
book in their office and then courier the same and then courier the
same . In the initial months the founders personal contact number
used to be the customers support numbers. So in the start they
tried their best to provide good service , focus on the website - easy
to browse and order and hassle-free ,and strove hard to resolve an y
customer issues .Since there were any established players in the
market , this allowed them a lot of space to grow and they in fact
did grew very rapidly.

Flipkart started with consignment model as discussed above, since

most of the customer have issuers like delivery delays etc result
from procurement model the company started opening its own
warehouses as it started getting more investment. The company
opened its first warehouse in Bangalore and later on opened
warehouse in Delhi, Kolkata and Mumbai. Today the company works
with more than 500 suppliers. As on date more than 80% orders of
Flipkart are handled via warehouses which help in quick and
efficient service

A humble beginning from books, Flipkart now has a gamut of

products ranging from : Cell phones , laptops , computer, cameras,
games, music audio player, television boxes, health care products ,
washing machine etc . Still Flipkart derives 50% of revenue from
selling books online .Flipkart is the Indian market leader in selling
books both online and offline, it enjoys an online share of around
80% . The electronic items have a large number of players like
Naaptol, Letsbuy, Indiaplaza, Tradus, Infibeam, Yebhi etc. The
electronic market share is distributed among them in different
unknown proportions

India has around 13.5 crore internet users today where as the
number of homes with cable and Satellite(C&S) television is
10.5crore(as of 2012). Internet usage in this country has now
exceeded half a billion people for first time, pegged at 566 million,
driven by rural internet growth and usage. It is now estimated that
there are 251 million internet users in rural India, and this is
excepted to reach 290 million by the end of 2019. Thus India has
tremendous growth and with the customers getting accustomed e-
commerce, the future of e-commerce sector is definitely rosy , the
number of internet users is all set to increase with time .

1.4 Evolution of logo