Great Indian Festive season is coming near and so is the restlessness of E-commerce giants. If 2014 Festive season was an eye opener for E-Commerce supply chain, this festive season, Festive Season 2015, is definitely going to be a reality check for them.
Here is an analysis of FS Labs, what happened during last Festive season, 2014 –
Flip kart started it all by announcing 6th October’14 as “Big Billion Day”. Target was to generate revenue worth Rs 1Billion! In just 10 hrs, Flipkart had been able to generate $100 Million of revenue through discounted sale. Despite all this success, the major driver of e-commerce business model, customer satisfaction, was not achieved. Following were the reasons why Festive season 2014 was not so hot for E Commerce Giants –
- Logistic challenge – By receiving 300,000 orders within 6 Hrs of start of sale, Flipkart reached to the limit of what their logistic team could actually serve. Single more order meant more pressure on logistic team and there could have been possibility of delivery failure as well. Flipkart logically closed the sale for that day.
- Limited orders – Just 300k discounted offers specially to that Indian crowd-which buys Jeans & Top only, was like a drop in the ocean. Those who were not able to get a piece of pie made a load of hue & cry on public media.
- Short supply & incorrect forecast – Most of the highly discounted product were sold out within minutes of start of sales. Bansals later on said that there were actually some glitch in predicting customer behavior and sales forecast for flash sale period.
- Order Auto cancellation – What added more to customer dissatisfaction was auto cancellation of order by Flipkart itself. Due to limited inventory and more than serviceable orders made it tough for Flipkart to actually serve the customers.
- Unreal discount -Price tag associated with few of the products listed in the discounted section were misleading. And despite big discount on those products, overall offer price was mere 5-10% lower than actual market price. Such erroneous data offered freedom to critics to slam Flipkart’s strategy.
- Site crash – Flipkart had anticipated 20 fold increase in website traffic and hence they had deployed nearly 5000 servers. That was actually far lesser an arrangement for the traffic observed on flash sale day.
It was definitely an eye opener for Flipkart, as well as other e-commerce market. Being leaders in E-commerce market in India and such a dismal planning and performance. Bansal’s had later apologized to customers by releasing a note. Flipkart “Big Billion Day” was good for E-commerce Industry. It leads to a marketing war which included Flipkart & Snapdeal. Twitter became trending place for #checksnapdealtoday and #Bigbillionday. Amazon remained the silent observer.
Just after the dismal one day show by Flipkart, other Indian E commerce giants – Snapdeal and Amazon India launched their own Festive discount sale. Learning from the experience and customer behavior from Flipkart’s ” Big Billion Day”, these two had been able to make most of the festive season by generating big sales revenue. Snapdeal even posted about making Rs 1Cr/ minute in its 1 day discount sale during Diwali.
Flipkart has come a long way ahead since that Festive season sale. It is now definitely better equipped and must have well thought out strategies for future flash sales.
Here are some well thought prospective initiatives that may do well for betterment of coming festive season sale, 2015 –
- Sales & Customer Behavior Forecast – Last one year must have been enough time for data collections regarding customer behavior and now is the time to deploy the learning into practical scenario. Better show by Snapdeal and Amazon for these flash sales.
- Registration for Discount – One of the best way for better (Not accurate) forecast is the pre-registration for discounted sale option. At the time of registration itself a favor could be asked from the customer about their buying priority in this festive season.
- Phase wise Inventory Creation – British fought battles in such a way that they always kept a reserve army for fresh attacks. Discounted sales should be planned in phase wise manner. Limited stocks should be available for each round. This way customer will know that they always have a second option and definitely they will not criticize the E commerce companies well before ending of sale period.
- Securing Local warehouses – based on the customer response during registration, E commerce companies could plan in advance about the inventory buildup. One more critical data availability is from which city what kind of demand will be there. Based on that securing a local warehouse and making a pre-sale inventory will be an added benefit. it will reduce delivery time, inventory cost and will ensure less expense for warehousing facility.
- Last mile Delivery boost up -Discounted Sales period shall always be planned with extra time for delivery. Now a day many service providers are available in market with sole aim of making delivery easier. Indian Post is always there to share the load. Boosting existing delivery support services will be added benefit for reaping more revenue.
- Server Readiness – Enhanced server capacities based on the customer traffic shall be planned in advance to support customers in a better way.
- Vendor Capital Issue – Capital crunch at vendors could always impact the discounted sales. A better planning of the cash flow to get required product ready at vendor end is the need of hour.
In reference to Festive Season 2015, we have already heard – Snapdeal is already planning to spend nearly $600 Million to strengthen its supply chain and logistic operation, In the last six months. It has built about 1.3 million-1.4 million square feet of fulfillment space with 63 centers across about 25 cities. E-commerce and mobile wallet Paytm is spending Rs 500 Cr. in marketing and logistics.
Let’s see how Big Shot E Commerce giants fare in Festive Season Sale this year, 2015.