This is the detailed PESTLE/PESTLE Analysis of Flipkart which elaborate the external factors impacting the company; Political, Economical, Social, Technological, Environmental and Legal.
Flipkart started its operations in 2007 as an online book store and the first book it sold was “Leaving Microsoft to change the world”, since then it has progressed to become a $7billion company and expanded into many other categories. The founders; Sachin and Binny are two Indians who first met at school but were not good friends back then. They became good friends when they both took admission in IIT and studied together. They both worked for Amazon and both shared the same dream of forming an e-commerce giant like Amazon so they quit their jobs and began competing with their ex employer. They have acquired a number of e commerce companies including Myntra.com, letsbuy.com, weread.com, chakpak.com and mime360.com. (Aurora)
Flipkart is under a lot of highlight by rules and regulation authority when it announces billion sales day, other retail sellers registered dissatisfaction over this action as they believed it would destroy the market for them. Then there was net neutrality issue in which Flipkart dismissed the purchase of Airtel Zero saying that it might go against the net neutrality as this telecom provider supports free internet app access to all. Free internet access defies net neutrality because it will allow ISPs to charge websites like youtube because they use greater bandwidths although this would allow users to use apps freely but those apps would be limited as not everybody will register to this free app coup. Eventually websites will transfer these charges to end users and ISPs can also control the internet speed lanes for websites then all the websites cannot be accessed keeping the same time frame and additional charges would be imposed if wished to do so. ( tech2 News Staff , 2015)
Economically viable business of Flipkart runs into difficulties when they offered big discounts on their Billion sale day. The sellers’ listings were removed from website by the company because it was unable to fulfill their orders and also the company was unable to efficiently manage logistics which is causing problem to both buyers and sellers. Last year the company faced some other problems when amidst sale their website crashed and so many products went out of stock even before the sale starts. They were also blamed for artificially playing with prices by increasing the original price so that the discount would look bigger. Flipkart has offered loans to its sellers in order to hook them with the company, these loans are collateral free and charge very low interest rates, and this is done through collaboration with banks. The company has realized the importance of having team of sellers to its side. (Shrivastava, 2015)
Government has plans to take e commerce businesses like Flipkart and snapdeal to rural areas in order to help these areas grow through entrepreneurship. Government will also help in setting up logistics and necessary funding. Two three ecommerce sites can come up to form a common service centre which means shared costs and skills which will bring economies of scale. Besides this Flipkart has also taken initiative to provide better work-life balance to its employees by contributing its day care expenses of parents working for them, maternity leaves have also been revisited and changed for better. The average age of Flipkart’s employees is 29 years which means most of them would be recently married with new born children to take care of and with the company releasing them of most important responsibility means higher employee loyalty.
India’s biggest ecommerce website Flipkart will go all mobile in future. Former CEO and co founder Sachin Bansali says that in this new era of mobile revolution the company cannot progress unless its employees also keep pace with the changing trends. Flipkart’s new acquisition Myntra also moved to all app on mobile for online sales. With the increasing number of smart phone sales and decreasing number of laptop and desktop sales in India it is rational for Myntra to think all mobile. App allows users to engage better with the help of customization and easier payment methods as a result of which the company has reported increase in number of visitors since it last made the changes. (TNN, 2015)
The firm isn’t doing much environmental harm because it does not manufacture anything on its own; it displays goods from different vendors. But it is encouraging consumption through mega sale events that it hosts which means more goods being produced and more Carbon dioxide emission. Other than this another potential environment threat that they are posing is that of price war in which all the brands have to roll up sleeves and dive in mud in order to survive. Price competition eats up the profit margins, kicks out small players, only big players with deep pockets can survive and they do so at the cost of profits. This hurts the industry in the long run.
There are many legal and moral issues that Flipkart faces each day when it comes to handling sellers like checking for counterfeit products which put the reputation of the company at risk also the buyers can sue the company for the fake products they have bought thinking of them as original. Secondly some sellers buy their own products in order to show the demand for their products and hence increase the prices, some start charging unreasonably high prices. Flipkart uses algorithms to detect unusual activities. Then there are incidents of dishonesty from cab drivers of services like Uber, the drivers were found to have two handsets so that they can get orders from two different services in order to fulfill their daily quota for incentives and these are really hard to control and curtail for if you spot one taxi driver doing this he will ask his friends next time to book the service for him.
tech2 News Staff . (2015, April 13). Net neutrality supporters downvote Flipkart app after its CEO supports Airtel Zero. Retrieved January 22, 2016, from tech2: http://tech.firstpost.com/news-analysis/net-neutrality-supporters-downvote-flipkart-app-after-its-ceo-supports-airtel-zero-262808.html
Aurora, P. (n.d.). 8 Facts You Should Know About Flipkart Founders. Retrieved January 21, 2016, from Top Yaps: http://topyaps.com/8-facts-know-flipkart-founders
Shrivastava, A. (2015, December 09). Flipkart to arrange easy working capital loans for vendors to ensure loyalty . The Economic Times .
TNN. (2015, December 08). Mobile-only makes sense for Flipkart . The Economic Times .