Hypercompetition in E-Retail: Flipkart.Com
HYPERCOMPETITION IN E-RETAIL: FLIPKART.COMSubmitted byMohit Jethi 15PGP030NABANKUR RAY 15PGP031ALAP KHOBRAGADE 15PGP117DHRUV SAPRA 15PGP1301. Was Flipkart right in pursuing Growth over Profits strategy?Answer- No. Flipkart wasn’t right in following Amazons strategy of pursuing growth over profit since.The analysis by General Atlantic showed that at the pace at which Flipkart was building infrastructure and adding employees, it would need $2 billion of annual sales just to break even. Though Amazon had alsoIncurred losses in its initial years while pursuing growth over profit, Amazon could afford that since
Almost all the “dot com” companies wound up their businesses at the same time and Amazon therefore had a great deal of time to expand relentlessly without bothering about profits. It had no competition and hence could sustain the philosophy of growth over profits.2. Why did Flipkart pursue aggressive acquisition strategy? Was it right?Answer-In light of its aims and objectives, Flipkart opted for speedy routes of acquisitions to diversify into various related and unrelated product categories. Top management of Flipkart was inspired by Amazon’s philosophy of preference for growth over profits. Thus, Flipkart’s aim was to first become the market leader with a dominant market share across different categories. To achieve this aim the company invested heavily in technology and supply chain.Given the industry structure in India which was completely different from USA when Amazon started its expansion. It can be said that Flipkart’s strategy was not right. It was evident since flipkart had to withdraw from many sectors such as music. 3. In the wake of competition from Amazon and other e-retailers, how should Flipkart move?Answer- As the threat of substitute is very high in this sector. Flipkart should try to create a competitive advantage which is sustainable. Till date all e-retailers were using pricing strategy to gain market share. New government regulation will prevent e-retailers from using predatory pricing. Flipkart should invest more to improve its supply chain. Better consumer experience and post sale services will help to improve customer satisfaction and grow loyal customer base.