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Nikunj Agarwal, Business Consultant (e-Commerce, Reta...

(more) 11 votes by Hemang Joshi, Sivapriya Nagendran, Chethan Karkala, (more) I would like to give you a general order fulfillment work flow of an eCommerce company (Flipkart will be doing similar to this) here: Step1-Order Download in OMS: Order is placed by the customer from the front-end (web store) which is then downloaded into an order management system (OMS). This OMS can be a part of your web-store or it can be a back-end Enterprise system where the customer order gets downloaded. Step2-Inventory Allocation: As soon as the order flows into an OMS, the inventory from the Warehouse gets allocated to the order quantity. Thus the free quantity of that particular SKU (product) is decreased by the order quantity. Step3-Order Picking: The operations/fulfillment team then start processing the order in the warehouse. First a picklist is generated against that order (usually its for multiple orders at one go and using wave management) and is handed over to a picker in the warehouse to pick that SKU from the bin/rack (in a zone). The picker picks that SKU from the location mentioned in the picklist and bring it back to the picking station (a stage location) Step4-Order Packing and generation of labels: After the picking is done, the next stage is packing. At the time of packing required documents are printed that needs to be send along with the shipment package to the customer. The order is then packed in a packing box and reports like Invoice, Shipping label are printed and kept along with the shipment. Step5-Order shipment: After the order is packed, it needs to be shipped out to the customer. The order gets assigned with the courier as per the shipping location (usually either at the time of order placement or at the time of packing) and a manifest is generated. Then the shipment is handed over to the courier guy who comes to the warehouse to pick up the shipment. Once the shipment is out of the warehouse the inventory gets reduced in the system. Step6-Shipment Delivered: The shipment then gets delivered to the respected customer and the courier company updates the delivery details back to the company whose consignment it was shipping. There can also be the case of customer return or return to origin due to customer unavailability which I am not

discussing here. The below flowchart gives the above explanation in brief:

The scenario discussed above is an ideal scenario where the inventory is stocked in the Warehouse. There can be other 2-3 possibilities where the inventory is not stocked in the warehouse, such as: 1. Back to back order fulfillment: In this case the operations download the orders and ask its runner to go to the vendor immediately and pick up the required SKUs from the vendor and bring it back to the fulfillment center to fulfill the order. 2. Drop shipment: In this case the orders are downloaded and handed over to the vendor directly to fulfill the orders and ship it to the customers. The warehouse doesn't have any control over this fulfillment. 3. Made to order: In this case, the orders are first taken from the customer and then the purchase order

is raised to procure the SKUs of that order from the vendor. Once the SKUs are in the warehouse, the normal fulfillment cycle (as described above in detail) is followed to process the order. Flipkart usually does the stocking model or the back to back order fulfillment model. Let me know in case you need to know other scenarios such as customer returns, procurement, etc. in detail

lipkart You got the delivery model right, now please increase your offerings!

Ever since its evolution, Flipkart has definitely created a great buzz in Indian ecommerce space which its predecessors like rediff and indiatimes have not been so successful in. And the reasons are quite obvious: two IIT + Amazon alumni guys entering the e-commerce market, starting the same way as Amazon did i.e. books, and most importantly creating a reliable delivery model where both the delivery commitment and the quality are ensured. This has indeed boosted the trust of consumers in online shopping over last couple of years.

Before Flipkart surfaced, there was a trust deficit between e-commerce websites and the consumers. This was because of hassle in delivery, bad quality, third party vendors selling fake products, multiple communication tiers etc. Flipkart overcame these problems spot on from the day one.

It doesnt sell used products, so there is no chance of a deviation in how a product condition was described vs. how it actually was on delivery. It does not have third party sellers yet (may be behind the scenes?), so Flipkart does the fulfillment of all orders by their selves. This provides Flipkart an even greater control on quality and delivery logistics. Flipkarts social presence is commendable. You send them a message on Twiter or Facebook and they will get back to you for sure, that too with a resolution.

I have two of my own experiences to substantiate the above.

I ordered a fitness product from Indiatimes, fulfilled by Telebrands. It was a Cash on Delivery with an instruction that I should be contacted on a landline number at work (Cell phone is not allowed at work :( ), and the product should be delivered over weekend. Nobody ever contacted me. 10 days after shipment notification, I called them back to check on the delivery, and the guy tells me that the product was returned to origin due to non-delivery. After further investigation, following facts emerged: COD is done through the VPP service of Indian Post. They never bothered to send me an intimation, let alone calling on the landline number. Overall there were 3 operation tiers Indiatimes, Telebrands and Indian Post and 3N potential breakpoints where N being the number of operations performed by each of these tiers. The instructions given while ordering on the Indiatimes website were not seemed to be forwarded to the consigner. Indiatimes does not take complaints if the payment mode is COD. Mind you Indiatimes, I did not pay cash in advance because of the trust deficit stated above. Anyways, so I ordered this product again, through COD. This time Post office sent the intimation. I went to post office to collect the shipment and to my surprise I was asked to pay 10% of the shipment value which was charged by post office to send the money to consignor. This charge was nowhere mentioned. I called Indiatimes customer care right away and the funniest thing happened Even they were not aware of this charge. The guy asked me to pay the amount and send the receipt back for reimbursement; the post office said they dont give receipt for that amount. Blah!

I also ordered a book on Flipkart and this was done in a flash of moment. Realized after ordering that I was flying outside Hyderabad the day the book was supposed to be delivered. I sent a tweet to @Flipkart, Flipkarts twitter handle, with the order ID and a message that if they could deliver the book a day earlier than promised. Flipkart responded back quickly that they would try doing that. I got a call in a couple of hours from them that they were shipping the book that very night and had instructed their courier partner to deliver it on time and by night I had the shipping confirmation. I got the book well in time. Whoaaa!! So Flipkart, you got the delivery model and customer service right. Now what? Last couple of years have witnessed not just Flipkart but many more e-commerce websites popping up. Yebhi.com and Letsbuy.com are to name a few. These websites are competing with Flipkart along with the older ones. If Flipkart works in few more areas, it

may give them an invincible edge over other Indian e-commerce. These are: Invest in technology: e-commerce is all about the technology platform backed by an awesome logistical arrangement. A technology platform can be vital in increasing sales, providing a better customer experience and ensuring recurring visits of customers. Today, Flipkart website has the basics of all this but they have a way to go. Flipkart needs to provide a customized user experience by saving the user cookie on browser. Today when I access the website, it doesnt remember anything about my last visit, my orders etc until I login. They need to have a You may be interested in section for suggestions. They also need to enhance their product review and feedback system to make it more reliable and a to go thing for users looking for some honest feedback that may help them in making shopping decisions. This all sounds like what Amazon does today, but again, in competition, you compete with the one ahead of you and not with the ones around or behind you. Increase geographical presence: Flipkart needs to increase their presence in Indian cities. With internet reaching out to the remote areas of country, an early move in increasing geographical presence will prove vital in near future. Although Flipkart boasts of delivering any product anywhere in the country, but then you have a small text box across each product to check the shipment availability in the PIN code of your area. Increasing the presence doesnt just mean enabling the delivery, to sustain the quality and commitment Flipkart is known for; they also need to increase their warehouse presence. In order to become really big, they need to expand beyond Metros and become a household name in tier 2 cities, just like Justdial.com. Increase product offerings: The range of products Flipkart offers today is not as big as the name itself. There are many things you look for on Flipkart but then go to either other websites or retail stores. This is one area Flipkart needs an immediate attention. Flipkart is still not a one stop shop for all your shopping needs and this is where they need to step up to justify their evaluation. There are ways to do it: one and the most popular one is to enable Flipkart platform for third party sellers. You may require a bigger customer service and client operations organization to handle this but this gives you a bigger range of coverage as far as the product offering is concerned. There may be some other innovative ways too to increase the offerings and Flipkart has a way to catch up with some competitors around it in this area. SEO, Marketing, Deals etc.: Flipkart also needs to be a little more aggressive on its marketing and ad campaigns. TV commercials of kids acting as adults are cute and appealing but remember your user base is the one who spends more time on internet than TV. Search Engine Optimization is another area where Flipkart should be looking into. Today you Google any product you want to buy, Flipkarts presence in results is negligible. Again, learn from Justdial, they are pretty much on top of the list when you

search for a local service provider. Deals is one way Flipkart can sustain a recurring relationship with their customers. I still visit Amazon deals; even I know they cant ship them to India. Although Flipkart gives a %age rebate on all of its products, but so does Amazon w/o mentioning it. Thats a byproduct of warehouse-to-customer delivery. It would be great if Flipkart draws the attention of its customers by providing deals and offers which keep changing on a regular basis thereby creating a curiosity and a weight factor among customers, which compels them to revisit the website and buy more things of their choices. To summarize, Flipkart has come a long way in last couple of years and has won the trust of customers which other e-commerce companies have been failing to do over last decade. Now its the time for Flipkart to look ahead and expand the business before others catch up. They also need to remember that they had reportedly declined Amazons bid of $500 M to acquire Flipkart, which has put them in even riskier situation since Amazon will be looking for either starting their own operations or buying a competitor in India. So for Flipkart to give Amazon the run for their money, they got to be going full throttle and reach a position which others struggle to reach over many years ahead.

Amazon + Dominos Delivery = FlipKart

Slide:1

Flipkart.com

Online Shopping Destination Founded in 2007 by two IIT Delhi Graduates, Sachin and Binny Bansal. Envisioned it to be an online store for Books hence Flip. Today, present across various categories movies, music, games, mobiles, cameras, computers, healthcare and personal products, home appliances and electronics, stationery, perfumes, toys, apparels, shoes and many more success story in the domain on Online Retail. Flipkart is amongst the top 20 Indian Web sites and has been credited with being India's largest online bookseller. Some of their Acquisitions : WeRead, Mime360, Chakpak.com, Letsbuy.com Focused on customer delight

Slide: 2

Company Structure

Slide: 3

Logistics

Flipkart ships more than 30,000 items a day.


Flipkart uses its in-house logistics (FKL) as well as third party logistics (3PL) services.

In case of FKL, (tier 1 cities including metros only.)

MOTHER HUB

DELIVERY HUB

LAST MILE DELIVERY

tie-ups with more than 15courier companies like Blue Dart, First Flight and Indian post for areas where courier do not reach.

logistics service is decided based on the area where the item needs to be delivered as well as product type and payment method.

The delivery time varies between 3 days to 3 weeks depending on the location and availability of the product. For example, the inter-city, trans-zone deliveries are made using air cargo whereas satellite cities and others in close proximity; products are transported overnight by train or truck.For the local parts of the cities where the warehouses of the company exist products are delivered using two-wheelers, bicycles, or on foot dependingupon the proximity of the place.

Slide :4 procurement In the beginning of its operations: The retailer (in this case Flipkart) holds the inventory owned by the supplier. Flipkart bought the product from the supplier only when it is sold to the end consumer. Fn (Since the channel was newand unproven, this was the most riskfree way to operate. However, they have now discontinuedthis now and inventory now is purchased.) Currently : Inventory: Flipkart items are pre-ordered based on previous sales data to stock as inventory. Just in time: Items procured just-in-time are used to serve immediate outstanding orders.eg. Expensive products. Sourcing at Flipkart is conducted at two levels:

Regional: By Regional Procurement Teams Centre: By the Central Procurement Team

Slide :5 Supplier Management


philosophy of starting out small and then scaling up as demand grows.
For a new category, start of by sourcing from local suppliers and distributors. enough demand generated, they approach the larger wholesalers or manufacturers directly. This serves two main pruposes: better deals from the bigger manufacturers
It avoids the channel conflict dilemma (An example of this strategy mentioned by PawanRaghuveer, Mgr. Flipkart Supply Chain Excellence Division, is that given that Flipkart is now Indias largest online retailer of books and they are larger than many offline stores as well most of Flipkarts books ar e sourced directlyfrom publishers.) highlight this and put it like a did u know

Slide 6 Inventory Management


Replenishment when below re-order point Holts forecasting method FIFO(First In First Out) method for its inventory management Flipkart uses Long Tail Concept

Slide 7: warehouse management system

Slide :8
Inward Processing Physical inwarding Quality Check + Scan Pre-packing of products Storage Management Put-list generation Order pending check: Physical placement on shelves Closing Put-list Outward Processing Pick-list generation Pick-up from shelves Final packaging Placement in respective delivery hubs bags

Slide: 9
Order Processing
Flipkart uses its own ERP systems to process orders. A typical order at Flipkart:

Browsing the website/customer searching

Selecting required items

Placing the order/payment

Average time taken to place an order unique identification of a customer

slide :10
Order Fulfillment
Customer orders are fulfilled either via Inventory or JIT procurement depending upon the availability of the products. Flipkart has fared very well in terms of the delivery time. It varies between less than 24 hoursand 3 weeks delivery time is 3-4 days with a typical breakup as follows: 1 day for order processing 2 days for delivery 1 day as buffer

Slide 11
Reverse logistics / returns processing
The returns for Flipkart are 2.6%. If follows a 30 day return policy. Many ustomers duping Flipkart.

Return of a product takes place due to: If the 3rd party cannot deliver to the address Customer does not accept the product Orders are cancelled while the delivery is being processes If the customer is not satisfied with the product (Customers can call the customer support and courier back the product to Flipkart.The delivery cost is borne by Flipkart.) When a customer requests return of a product, there are 3 paths this request can take: Replacement Store credit Actual cash-back

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