Flipkart Business Model - How Flipkart Makes Money

Flipkart Business Model - How Flipkart Makes Money
Flipkart Business Model

Every Indian citizen is aware of the e-commerce site called Flipkart. It is a company that has grown rapidly over time, worked its way to the top, and got attention from big names like Walmart which acquired the company for a whopping 16 billion dollars in 2018. Currently, in India Flipkart is the second largest e-commerce platform which has reported a revenue amounting to approximately 433 Billion Indian rupees in the financial year 2021.

Flipkart was first idealized by Sachin and Binny Bansal in 2007 while working at Amazon. The Bansal duos, who are often mistakenly thought of as brothers, were able to successfully design a business model based on their experience and expertise. Their business scheme led to the initial funding process from external sources.

Initially, they invested a total of $5,600 towards developing an ideal online book store. 2 years after their initial launch, Flipkart gained enough potential to raise $1 Million from Accel India. They later formed alliances with Tiger Global, raising a total of $10 Million in 2010 and $20 Million in 2011.


Sachin Bansal: The Man Who Brought Up Flipkart!
The Indian startup circuit has witnessed the rise of many successful companies.Amongst these, the story of Flipkart is more of an inspiration for many people.Flipkart had to take the long road to success. Initially starting as an onlinebookstore from a two-bedroom apartment in Bengaluru, the comp…

Flipkart- An Overview
Flipkart's Revenue Generation
Flipkart Business Model
Flipkart Digital Marketing Strategy
How Does Flipkart Function Exactly?
Other Sources of Revenue for Flipkart

Flipkart- An Overview

Flipkart works as a marketplace that connects all interested sellers to their potential customers and assists them in making the sale. Flipkart follows a clear Business-to-Consumer model or more commonly known as a B2C model. With over 80 categories, Flipkart has sellers for all items, ranging from groceries, toiletries, clothes, books, shoes, furniture, electronics, etc.

Flipkart's Big Billion Day Sale is like a festival in the country. It is usually during the festival season, where we get the best deals and discounts on various products.

Flipkart has now become more of a multichannel platform. It launched its FinTech app called PhonePe. Recently, it has also started its own food retail business called FarmerMart soon.

The company's main focus is on providing a seamless shopping experience to its customers. It invests heavily in technology and logistics to ensure fast and efficient delivery of products. The company has also introduced innovative features like no-cost EMI options, product exchange policies, and buyback guarantees.

In 2018, Flipkart was acquired by Walmart, which further boosted its financial strength and operational capabilities. Flipkart operates multiple subsidiaries, including Myntra, PhonePe, and Flipkart Wholesale, which cater to specific customer segments and provide specialized services.

In addition to its e-commerce operations, Flipkart also offers various financial services to its sellers through its subsidiary, Flipkart Financial Services. The company has also launched its own loyalty program, Flipkart Plus, which offers various benefits to its customers, such as free delivery, early access to sales, and more.

Overall, Flipkart has transformed the Indian e-commerce landscape, and its success has inspired the growth of other e-commerce companies in the region.

Flipkart's Revenue Generation

To understand the revenue generated by Flipkart even after facing a loss of INR 46,895 Crore, one has to know the different sources of income for the company. The most obvious source of income is via the sellers it enlists on its platform. It charges a varying and minimal commission along with a convenience fee from sellers as per their sales or revenue or an established deal.

Secondly, Flipkart has its own company called E-kart that provides logistics and delivery services to the sellers on the platform. Hence it once again charges a minimum fee for its services.

Thirdly, when you open the website or the Flipkart mobile app, there are various advertisements visible. Flipkart lends space for them and hence generates revenue from external sources.


Flipkart Online Shopping - Latest News, Subsidiaries, Business Model
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Flipkart Business Model

Flipkart's business model can be broken down into the following components:

  1. Online Marketplace: Flipkart's online marketplace allows sellers to list their products and connect with millions of customers across India. Sellers can list their products on the platform, and buyers can purchase those products through Flipkart.
  2. Commission-Based Revenue: Flipkart generates revenue by charging a commission on the sale price of the products sold on its platform. The commission rate varies depending on the category of the product and the seller's rating.
  3. Logistics and Fulfillment Services: Flipkart has a robust logistics and fulfillment network that helps sellers deliver products to customers across India. The company charges fees for these services, including packaging, storage, and shipping.
  4. Advertising Revenue: Flipkart also generates revenue through advertising. It offers various advertising options to sellers, including sponsored products, banner ads, and social media promotions. Advertisers pay Flipkart for featuring their products on the platform, which helps increase their visibility and sales.
  5. Subscription-Based Services: Flipkart Plus is a loyalty program that offers various benefits to its customers, such as free delivery, early access to sales, and more. The company generates revenue through Flipkart Plus subscriptions and by offering exclusive deals and promotions to its members.
  6. Financial Services: Flipkart Financial Services is a subsidiary that provides various financial services to its sellers, including working capital loans, insurance, and invoice financing. The company generates revenue through fees and interest charges on these services.

Overall, Flipkart's business model is focused on providing a seamless shopping experience to its customers while providing various revenue streams to its sellers and partners. It invests heavily in technology and logistics to ensure fast and efficient delivery of products, and it continues to innovate and expand its offerings to maintain its leading position in the Indian e-commerce market.

Flipkart Digital Marketing Strategy

Flipkart has a strong digital marketing strategy that has helped it build a strong brand and attract a large customer base in India. Here are some key elements of Flipkart's digital marketing strategy:

  1. Social media marketing: Flipkart has a strong presence on social media platforms such as Facebook, Twitter, and Instagram. The company uses these platforms to promote its products, share customer reviews, and engage with its followers.
  2. Search engine optimization (SEO): Flipkart has a strong focus on SEO and invests heavily in optimizing its website for search engines. This includes optimizing product listings, creating high-quality content, and improving website speed and performance.
  3. Email marketing: Flipkart uses email marketing to keep its customers informed about new products, offers, and promotions. The company sends personalized emails based on customer preferences and purchase history, which helps improve customer engagement.
  4. Influencer marketing: Flipkart has collaborated with various social media influencers and celebrities in India to promote its products and build brand awareness. These influencers help reach new audiences and promote Flipkart's products in an authentic and engaging way.
  5. Performance marketing: Flipkart invests heavily in performance marketing, including search and display advertising. The company uses advanced targeting and retargeting techniques to reach the right audiences and drive sales.

Overall, Flipkart's digital marketing strategy is focused on building a strong brand and engaging with customers across various digital channels. The company's investments in SEO, email marketing, influencer marketing, and performance marketing have helped it become one of the leading e-commerce platforms in India.

How Does Flipkart Function Exactly?

Flipkart is an online B2C shopping portal, which provides shopping opportunities to Indian consumers. It allows the vendors to sell their ready-to-sell products by giving appealing discounts or sales to its consumers who wish to buy them. The buyers choose the products they want and place an order and they are shipped to them. The sellers get an agreed price after deducting some commission for Flipkart's services that are provided to these sellers.  

Here's how the company functions:

  1. Sellers list their products: Sellers list their products on the Flipkart platform, providing details about the products, including product images, descriptions, and pricing. Sellers are required to follow Flipkart's guidelines and policies for product listings.
  2. Customers browse and purchase products: Customers browse the Flipkart website or mobile app and search for products they wish to purchase. They can filter search results based on various criteria such as price, brand, and product category. Customers can also read product descriptions, view product images and reviews, and compare products before making a purchase.
  3. Order placement: When a customer decides to purchase a product, they place an order on Flipkart. The customer can choose from various payment options, including cash on delivery, credit/debit cards, net banking, and e-wallets.
  4. Notification to the seller: Once an order is placed, Flipkart notifies the seller about the order and provides the necessary details such as the customer's shipping address and order details.
  5. Product delivery: The seller ships the product to the customer's address using Flipkart's logistics and fulfillment network. Flipkart provides various services to sellers, including packaging, storage, and shipping, to ensure fast and efficient delivery of products.
  6. Payment processing: Once the customer receives the product and confirms the delivery, Flipkart processes the payment and deducts the commission and fees from the seller's account. The percentage commission charged by Flipkart varies from the type of product and its sales. It ranges from 5% to 20% excluding taxes and discounts. This was the basic idea from which Flipkart earned its online place.
  7. Customer service: Flipkart provides customer service support to handle any issues or concerns that customers may have regarding the product, delivery, or payment.

E-commerce Business Model

Other Sources of Revenue for Flipkart

Flipkart generates revenue not just by selling products but has various revenue channels including:

  • Web Portal: Providing a platform to the sellers, Flipkart charges a commission for all the services given to them proving to be the basic source of revenue.
  • Listing & Convenience Fee: This is another method of revenue, it charges some amount of listing fee to the sellers and convenience fee to the buyers for fast delivery. The convenience fee also includes the gift wrapping charges, billings that add up to the total revenue of the company.
  • Logistics: This is revenue collected from the sellers for shipping their products. It provides services to its sellers which are similar to other courier companies. The charges of delivery services vary from place to place and the distance required to be covered.
  • Digital Media: Flipkart sells ads to the sellers or brands as well as various products such as co-advertising, co-branding, etc.
  • Co-branding Opportunities On Flipkart’s Homepage: The slider on Flipkart’s homepage introduces a chance for sellers to advertise their products and launches to the buyers which get thousands of views.
  • Co-advertised Products Towards Publications: The ads that are shared by the newspapers and magazines’ front pages and allow the brands to advertise themselves. Suppose a new phone has been launched in the market. Flipkart gets the ad on the front page of the newspaper and the cost is shared with the brand that has to advertise the product.
  • Target Search Results: This works like when someone searches for a product, Flipkart decides which sellers’ products are to be shown on the top. This is the space that will be solved by Flipkart shortly.
  • Myntra: Myntra is a website owned by Flipkart which is another online fashion portal that boosts up the overall fashion category of Flipkart. Myntra earns a huge amount of sales on its fashion products and has been measured to be higher than the fashion sales of Flipkart. The revenues earned by the website Myntra are accounted for the total earnings of Flipkart.

Conclusion

Flipkart is focusing on bringing back local brands to its platform to improve the buying experience for its users. The business model of Flipkart is all-encompassing and has several revenue-generating streams. Overall, Flipkart's business model has disrupted the traditional retail industry and transformed the way people shop in India. Its success has inspired numerous other e-commerce platforms to emerge, making it an important player in the Indian economy and a model for other companies to follow. There is a lot to learn from the Flipkart revenue model.

Frequently Asked Questions - FAQs

What is Flipkart's business model?

Flipkart operates as an online marketplace that connects buyers and sellers across India. The company generates revenue through commission-based fees, logistics and fulfillment services, advertising, subscription-based services, and financial services.

How does Flipkart make money?

Flipkart generates revenue by charging a commission on the sale price of the products sold on its platform, as well as fees for logistics and fulfillment services, advertising, subscription-based services, and financial services.

How does Flipkart differ from other e-commerce platforms?

Flipkart was one of the first e-commerce platforms in India and has played a significant role in transforming the retail industry. The company's focus on technology and innovation, customer-centric approach, and strong logistics and fulfillment network have helped it maintain its leading position in the Indian e-commerce market.

Is Flipkart B2C or B2B?

Flipkart operates on the B2C model (Business-to-Consumer).

What is Flipkart Plus?

Flipkart Plus is a loyalty program that offers various benefits to its customers, such as free delivery, early access to sales, and more. The company generates revenue through Flipkart Plus subscriptions and by offering exclusive deals and promotions to its members.

How does Flipkart handle customer complaints and returns?

Flipkart has a dedicated customer service team that handles customer complaints and queries. The company also has a flexible returns and refund policy that allows customers to return products within a specified timeframe if they are not satisfied with their purchase. Flipkart also provides various options for customers to contact customer service, including phone, email, and live chat.

How has Flipkart impacted the Indian economy?

Flipkart has had a significant impact on the Indian economy, particularly in the e-commerce sector. The company has created numerous job opportunities, both directly and indirectly, and has helped many small and medium-sized businesses reach a larger customer base. Additionally, Flipkart has contributed to the growth of the digital economy in India and has played a key role in transforming the traditional retail industry.

What are the top competitors of flipkart?

Flipkart faces strong competition from other e-commerce platforms in India. Some of the top competitors of Flipkart are Amazon India, Snapdeal, Paytm Mall, Jabong and more.

What is the future plan of Flipkart?

Some of the key future plans of Flipkart includes:

  • Expanding into new product categories
  • Investing in technology and AI
  • Focusing on rural markets
  • Investing in logistics and supply chain
  • Increasing partnerships with MSMEs

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