Flipkart: Grappling with Product Returns

Description

In June 2016, Indian e-commerce giant Flipkart Private Limited (Flipkart) faced a common issue among online retailers: the firm needed to optimize its product return rates to reduce losses caused by returns. Accordingly, Flipkart changed its return policy, including raising the commission fees charged to sellers by an average of 5 per cent. Many sellers resented the policy change, and more than 1,800 led an online protest against Flipkart, which was unprecedented in India. These sellers made their accounts inactive and removed the product listings for nearly 1 million product units. Seeing an opportunity, Amazon India decreased its commissions on various product categories by 2–7 per cent to lure disgruntled sellers to its platform. While its competitors experienced rapid growth, Flipkart struggled to keep the market share it had acquired so far. The company experienced a massive drop in its valuation during fiscal year 2015–16, and had not registered any profit since its inception in 2007. Flipkart had to reduce its losses resulting from a high number of returns without displeasing both of its key stakeholders—sellers and customers.

Learning Objective

This case is intended for use in e-commerce or digital marketing courses at the graduate or postgraduate level. Notable themes of the case include balancing vendors’ and customers’ expectations, online consumer behaviour and factors that influence it, and managing online procurement. The case helps students understand the dynamics of online retail (e-commerce) platforms, with particular focus on vendors and consumers. After working through the case and assignment questions, students will understand how to ·manage third-party sellers on an e-commerce platform; ·influence consumer buying behaviour for e-commerce; and ·manage returns on an e-commerce platform.

Keywords

Digital marketing E-Commerce online consumer behaviour online consumer retention vendor management