Offer Strategies of Flipkart - Diwali Season 2013

Flipkart frames each and every offers in their website based on the deep analysis of the analytical data, especially hot products and the expected range of discounts from customers. More than report determination, they come up with strong strategies to increase the Diwali sales. 

Some of the offer strategies are analyzed here.

1. Product categories are gifts: After staying in this industry for more than four years, Flipkart has understood the pulse of the customers exactly and improvised its offering strategy. These products with big offers are nothing but gifted category products. During Diwali, Indians give gifts to their loved ones based on their purchasing capacity and Flipkart has covered those gaps by providing stunning discounts on all eligible products. I think it will give them their expected outcome during this festival season. 
2. Covered all age groups of customers: Flipkart has touched all age groups of people with its new offer strategy. For instance, even kids get free watches when they buy clothing worth of more than Rs. 1000. (Click the respective links to know its offers)
   
• Youngsters – Clothing, bags, gadgets, personal care products, footwear, laptops, books, etc. 
• Newly married couples – Mobiles, tablets, cameras, clothing, etc.
• Married couples – Home appliance, apparels, baby products, Home furnishing, etc.
• Kids: Clothing, accessories, etc. (freebie offer)
• Since old people are not the primary customers of Flipkart, they don’t have anything to celebrate from Flipkart this Diwali.
3. Constant updates in offers/discounts: Flipkart is one of the professional companies in India who keep tracking their existing activities and provide the needed ones regularly. 
• One such process in this activity is their feedback process. Flipkart professionals closely monitor the customers, especially those who are not purchasing but drifting in their website, and if needed they try to interactive with them over phone to understand their need. 
• A friend of mine received call by Flipkart after finding his log time in the website and enquired about the products or offers he is interested in. Additionally, they also noted the feedback or changes needed in an offer. It’s a welcoming part of Flipkart, where it’s trying to get the loyalty from the customers quickly.

I believe, with these strategies and precise execution, Flipkart is proceeding forward in its vision successfully.

Flipkart’s game of offers in this festival season

 

Flipkart, the Indian e-commerce company, is playing its game of offers for this Diwali to make strong impact in its industry. It started its game during Dussera (by 8^th October) and planning to end on Diwali (3^rd November) with well determined offers. Flipkart is known for its versatile list of products and excellent delivery, even in tier-II and tier-III cities, in the e-commerce industry. In this article, we are going to look at deeper analyses of Flipkart offers and the strategy behind it.

Flipkart focuses on four types of offers:

1. Discount:
   It’s is a very common technique used in marketing, including online marketing. Discounts attracts the attention of the people easy and commonly seen in the following ways:
    
1. In figure, it’s classified as percentage discount, fixed amount discount and slash price.
2. The discounts figures differs based on products or brands purchased and the banks (credit/debit cards/net banking) used for purchasing. Flipkart used this same formula now to intensify the offers under various categories such as apparels, footwear, mobiles, accessories, etc. Please refer the following hot Diwali offers from Flipkart: 
• Laptop up to 20% discount
• Home appliances starts with 25%discounts 
• Nexus tablet comes at a very lowestslash price
• Personal care products with minimumRs. 100 off
• 15% of accessories 
• 50% off on books (on computing and internet books)
2. Cash back: Flipkart provides two cash back offers now:
1. 10% cash back (reduced from 15% recently) for customers who buy more than Rs.10,000 worth of goods with Standard chartered bank credit or debit card. (SCB cash back) 
   
2. 5% for Mastercard users on clothing. (Mastercard cashback).
   In general, cash back is similar to discounts however, in the case of SCB, it slightly have different benefits as mentioned below:
1. The cash back is available for a single purchase of more than Rs.10,000 until Diwali (3rd Nov), either single item or list of items.
2. Flipkart is giving 10% cash back only for credit and debit cards of Standard Chartered bank. The customers will not get the cash back amount immediately rather it will be credited back to credit card (or to bank account in case of debit card) by 30th November 2013. So, for credit card users, if you make a purchase today your cash back amount will be reflected in the next month’s credit card statement.
3. Maximum cash back a customer can get is Rs.5000. For instance, if you’re buying a laptop for Rs.65,000 then you won’t get Rs.6500 but only Rs.5000 as cash back.
4. These cash back is available only for products from WS Retails, one of the popular retailers of Flipkart. You’re out of luck if you want to buy MacBook because it’s not listed with WS Retail and you won’t get cash back.
3. Freebies:
   It’s another common technique of developing instant purchase for customers. Mobiles or camera with memory card, shaving foam with grooming kits are some of the exciting offers available now.
4. Deal of the day:
   
   Certain products are exhibited by Flipkart as special deals for a limited time (24 hours). Customers need to check these offers regularly to find their interested product at attractive offer. Customer can find last, current and forthcoming offers from Deal of the Day.

So enjoy your Diwali with interesting offers from Flipkart. (Also read the offer strategy of Flipkart for this diwali season)

Big Bazaar Direct - Benefits for franchisees and customers

So far, we have studied BBD from business perspective of organization. Now, in this article, we are going to visualize the business and benefits from the angle of franchisees and customers.

Franchisees

These are the features for the franchisees:

1. Franchisees can be any interested people such as Kirana store owners, entrepreneurs, chemists, homemakers, insurance agents, etc. who want to expand their business through Big Bazaar tie-up.
2. A person has to make an upfront investment of Rs. 3 lakh to become a franchisee. The breakup of the investment is like this: i) Refundable security deposit – Rs. 1 lakh ii) BBD Set-up charges – Rs. 1 lakh (it includes the cost of tablet, 1 year training, initial branding, launch materials, etc.) iii) E-wallet amount – Rs. 1 lakh (It’s the money used to place orders)
3. The commissions of BBD various based on the product: Grocery item – 3 to 6 percent, electronics – 3 to 7 percent and furniture – 8 to 20 percent. The total commission will be credited to the franchisee account on 5th of every subsequent month.
   
4. The franchise will get an opportunity to develop his or her customer base through BBD. The brand of Big Bazaar helps the franchisees to gain their credibility immediately and allow doing business faster.
5. Franchisees has an option of doing it as side business.
6. Franchisee doesn’t have any territory limitation in getting orders. It’s not like brick-and-mortar stores and franchisee based in Chennai can take orders in Chengalpattu. All the franchisee need to do is to enter the right area code while taking orders.

Return of investment: 

Let’s take the average percentage of commission as 7%. A franchisee is investing 3 lakhs and, even though 1 lakh is refundable, the franchisee needs to make > 43 lakhs of turnover to breakeven the investment. The breakeven period purely depends on the franchisee’s ability.

Customer's point of view

Indians normally prefer to shop items by visiting retail stores, either Kirana stores or modern stores. However few people, who are >50 years of age group, may tend to go for home delivery especially groceries and medicines. Considering this case, these are the pros & cons from customer’s side:

1. The customers will get their goods delivered at their door steps without straining themselves.
2. If order is made through tablets then the customers can get more than 1000 deals, besides the offers available in Big Bazaar stores. An additional shipping charge will be charged is order amount is Rs. 500 or less.
   
3. Customer can select groceries, electronics and furniture products from BBD product catalogue. Currently no perishable goods like fruits, vegetable and dairy products are offered in this innovative business.
4. Customers have the choice of choosing items freely (with suitable SKU), since the franchisee take the orders individually.
5. The only disadvantage is the delivery of goods in 3-7 days. Waiting a week to get grocery items won’t be workable for people for a young family who prefer to buy items frequently. It will be workable for family which plan to buy items for future.

Hope these three articles might help you understand the whole picture inside Big Bazaar Direct.

Other articles:

Future group – Still the Maharaja of India Retail Industry

Big Bazaar Direct - A new mutation business model from Future group

Big Bazaar Direct - A new mutation business model from Future group

People in metro and tier-I cities are well adapted to modern shopping in hypermarkets. E-commerce is another modern retail system which is slowing gaining its presence in India. Indian retail market is estimated to be $ 490 billion and grows at CAGR of 5.9%. However the surprising part is only 10% of it is under organized sector and still more than 85% of the transactions are in cash, under-invoicing and not reported in the daily order of sales. Considering the situation Future group, which is known for its persistent approaches in Indian retail industry, is coming up with an innovative business model called Big Bazaar Direct (BBD). It’s considered to be first of its kind and has no precedence in the world. 

Big Bazaar Direct

BBD is a mutation of direct sales and e-commerce business models which unites Big Bazaar with your local stores and delivers the product at customer’s doorsteps, with the help of strong technology. 

BBD business process:

 

• Here Big Bazaar will have a franchisee tie-up with local stores, who will take orders by visiting the customers.
• These orders are taken by franchisee in a tablet which is integrated with Big Bazaar back-end server and shows the products catalog and its online availability to avoid discrepancy.
• Once the order is placed, customer will get a SMS confirmation and he/she have to pay the franchisee in cash.
• The order goods will be delivered at door steps by Big Bazaar in 3-7 days.

To learn how to become a franchisee, please check this link.

Business benefits through BBD model 

(Also read benefits of franchisee and customer from BBD) 

Mr. Kishore Biyani has introduced this business not merely to come up with an innovative model; rather he tried to eliminate some key existing problems in the retail industry.

1. Reduce high credit risk: High credit is one of the major factors which have to be in control for an efficient supply chain management. High credit to suppliers and dealers will increase the distribution cost and make the supply chain inefficient. So, through this model, Future group will slowly reduce the credit period since its getting the money from the franchises right immediately after the order.
2. More offers: This model will provide high working capital to Future group, especially from the security deposit from franchisees. For instance, if 1000 franchisees joined BBD then image the amount of investment Future group will accumulate in the next 4 months.
3. Reaching more customers: Now Big Bazaar will reach all corners of India for selling its products and the interesting part is the Kiran stores (who are meant to be the competitors) may promote their products to customers. Big Bazaar is planning to touch 70% of Indian population, from its present 30-40%.
4. Touching smaller cities: Future group is mainly focusing on Tier-II and Tier-III cities with BBD. These are the cities which has not fully explored the modern retail system and still at the early stage of development. Hence it has started a pilot project in Nagpur because Big Bazaar has its national warehouse in Nagpur and doesn’t required additional investment for setup. Currently, it has expanded its work to Amravati and Bhandara too. After this, they plan to test the market in Gujarat by kicking another pilot project.

Challenges:

1. Longer delivery time: Even though this business seems exciting, the real challenge lies in the execution part. It’s not easy to supply goods to a corner of India within 7 days. Big bazaar so far has handled business-to-business logistic however, in BBD, it has to handle business-to-customer logistic additionally.
2. Warehouse setup: The order in BBD will be supplied by Big Bazaar’s national and regional warehouse. However they are already overloaded with Big Bazaar’s store business. Hence Future group have to establish or rent more warehouses to handle BBD business.
3. Logistic: The delivery period of one week is very long especially for FMCG products. Most of the time, working class people order the products during their office hours and want it to be delivered within a day. So Future group should focus on reducing the delivery period to 2 days but it needs tremendous amount of manpower and technology investment (such as warehouse automation, vehicles for last mile deliver or bulk delivery and packaging) to do so.

BBD is a critical move especially during this bad economy situation in India. Any delay or error in delivering the goods to the customers will damage the mother brand Big Bazaar directly. Nevertheless, BBD is expected to make a national footprint by end of 2013. 

The whole retail industry (including the competitors and customers) are closing watching this business and looking forward a new revolution in Indian retail industry.

Future group – Still the Maharaja of India Retail Industry

One person in Future group doesn't required introduction in India. He is the famous entrepreneur who lifted the Indian retail industry to international standard. Yes, I am referring to our “Mall King Mr. Kishore Biyani” who emerged from a normal family in Gujarat to the owner of India’s biggest retail chain, Big Bazaar. He incorporated his company in 1987 as Manz Wear Private Ltd and launched the popular brand “PANTALOONS”.

The business model of Big Bazaar actually evolved from a Southern Indian Retail store called Saravana Store, as he mentioned in his book “It Happened in India”. He got the inspiration of Big Bazaar in Sept 2000 when he was standing outside Saravana stores in Ranganathan Street, Chennai. Saravana Stores is a 25 years old family run business which has its presence in textile, retail, jewelry, etc. and known for its price affordable products.

Mr. Kishore Biyani understood that Indians really love to do shopping with their family, after witnessing families (including children and senior citizens) and young couples shopping in Saravana Stories. 

During the journey of Future group, Mr. Kishore has confidently implemented various strategies and made the company to still stand in its successful path. Let us see few of those strategies to understand its impact on the retail industry.

1. Fast expansion of retail space: Future group landed its foot in modern retail by establishing its first store of 8000 sq. ft. in 1997 in Kolkata. However, its current retail space is 16.5 million sq. ft. which clearly showed the ability of Mr. Kishore Biyani to expand its store to reach large number of people. Big bazaar, so far, has touched 35-40% of Indian population and expecting to reach 70% through its new business strategy Big Bazaar Direct (BBD). (Special Note: In 2001, after the acceptance of Big Bazaar, the company opened three more stores in Kolkata, Bangalore and Hyderabad. The reason behind the choice of these locations is the boom of Information Technology (IT) industry in these cities those days. He believed that the IT industry will change the lifestyle of people and help to develop modern shopping.)
   
2. Developing new brands: Brand creation and development is the vital part of future group. The company so far has launched three brands for three main categories: Pantaloons (formal trouser brand), Bare (denim brand) and John Miller (formal shirt brand). Future group has started this trend of brand building with Pantaloons in initial stage of establishment and also developed few western brands like Clark (UK footwear retailer) and Celio (Fashion wear maker from France) through joint ventures.
   
   
   
3. Franchisee Model: Future group understand the franchisee model effectively and used it for expanding stores all over India rapidly. Big bazaar stores across India are mostly handled by franchisees. The store space and people management has to be done by franchisee, whereas the stocks are supplied by Future Group. It’s a simple but an efficient model used to magnify business in India.
4. Invite the masses: Big bazaar stay connected with the customer by providing exactly what they need. Its strategy of providing low-cost product in a specific day has certainly turned the Indian towards the doors of Big Bazaar. It declared a day as “Saal Ka Sabse Sasta Din” (cheapest day) and provided the products cheaper compare to normal days. The special part of the marketing activity is the language it uses to communicate. It prefers to use Hindi so that the slogan will reach most of the Indian customers. Using this strategy, it tries to get two benefits: i) control over the supply chain of products (i.e. clear the inventory and order new stocks) ii) Pulls more new customers to shop. Besides this, it communicated various slogans (Isse Sasta Aur Accha Kahin Nahin/Hafte ka Sabse Sasta Din/Purana Do Naya Lo… Badal Dalo)to inform the sales of low-cost products.
   
5. All products at one place: Mr. Biyani doesn’t want any customer to leave Big Bazaar saying some items are not available in the store. He designed this retail store in such a way that all the products including FMCG, apparels, vegetables, fruits, etc. are available at one place, along with the freedom of choice in products which indeed encourage shopping.

The journey of Future group is very unique. It is this company which developed the modern retail industry from scratch and stood on top against the growing competitions and market threats. It overwhelmed all the challenges through its customer centric approach and innovations. Today, whatever the brand people buy, they still say that they brought it in Big Bazaar. This is the image he has created and that’s why he is called as Maharaja of Indian retail industry.