PESTLE Analysis Of Flipkart

POLITICAL + + +
* Government initiative to promote Internet
penetration as well as planned 100 Smart cities
projects.
* Higher speed and cheaper data tariffs with wider
network coverage due to TRAIs permission to share
telecom infrastructure.
* CCIs & Ministry of Corporate Affairs NOC to Steep
price bumper (Billion Day -Flipkart) sales by online
retailers.
* Foreign Retail Majors still grappling to acquire pan
India license baring Tesco.
* Worlds largest retailer Wal-Mart allowed to operate
only at wholesale level giving temporary respite to
both Brick & Mortar as well as Click operators from
impending competition.

POLITICAL - - -

Consistent pressure from Traditional retailers

against Online Retailers who form the sizeable
chunk of middleclass voters.

Pressure on Government to revive ailing economy

through FDI in Retail sector to deliver on its
electoral promise of creating jobs.
U.S lobbying to open up Retail sector to help its
Retail Giants access to booming Indian middleclass
market.

ECONOMICAL + + +

ECONOMICAL - - -

* Best performing Emerging market Economy with Ecommerce registering revenues of INR 630 Billion. In
FY 2013.
* High disposable middle class income.
* Low fuel prices improving profitability due to low
freight charges.
*Increase investment by foreign as well as Indian
Venture Capitalists in Indian Retail companies like
Ratan Tata in Snapdeal & Morgan Stanley of US
1billion in Flipkart.
Low investment & Operation cost as compare to
Traditional Brick & Mortar model.
* Lack of adequate road infrastructure accompanied
with long travelling time pushing customers towards
online shopping particularly in products requiring less
customization and are available in more standardized
forms.

Lack of Rural infrastructure facilities which is key

to address delivery inefficiencies leading to
significant cost escalation, customer dissatisfaction
as well as lost opportunity in terms of untapped
market .
Lack of adequate power supply is also a major
issue in remote areas.
* Growth of E.com companies are related to
penetration level of Internet connected devices , so
it indirectly depends to some extent on growth od
Electronics gadget industry as well as penetration
of Telecom services . This is particularly more
relevant in Tier 3 and rural areas.

SOCIAL + + +

SOCIAL - - -

*Higher acceptability of online shopping among urban

literates as compare to rural areas.

* Apprehensions regarding online transactions as

well as on time delivery concerns among existing
and prospective new customers both Tech savvy &
others.

* Convenience, Competitive prices and trust are key

drivers among online Tech savvy customers.
*Social media acting as a catalyst in promoting online
shopping.
Companies presence on social media platform
facilitating customer feedback, resolving their
problems through online service deliverable models.
Availability of online product reviews regarding
delivery as well as service issues.

* Long term relationships & trust on local Mom &

Pups store ( Kirana store ) as compare to online
retailers particularly those lacking access to
modern retail facilities .
* Negative propaganda by competitors regarding
products as well as those opposing to the whole
idea of online shopping like local kirana
shopkeepers as they see online retailers making a
dent in to their market share.

Cash On Delivery COD payment mode which is more

relevant to Indian customer Psychology than their
western counterparts.

*Age old tendency of customers to have a feel of

the product evaluating it before buying which can
me more conveniently offered at Brick & Mortar
rather than online retailers.

* Contemporary Corporate culture involves more

travelling so offering less time for Traditional
shopping which also acts as growth factor .

* Lack of real time social platform to satiates

Emotional Fulfillment as online shopping is usually
a solitary affair.

TECHNOLOGICAL + + +
* Availability of cheaper smart phones , budget
tablets increasing internet penetration level.
* Evolution of Internet technology in terms of speed
and indoor connectivity like 3G (2300 M.HZS) and the
upcoming 5G technology in 2015.

TECHNOLOGICAL - - Recent Data compromise issue at Retail chains of

Target & Home Depot reading machines in U.S
caused a serious concern among customers, which
highlights the need to continuously innovate
security soft wares.

* Availability and implementation of Advance

security software to make financial transaction more
secure.

Lack of integrated multilingual interaction across

all platforms.

* Utilization of Advance search engine optimization

technologies helping customers to zero in on their
preferred products with desired products.

* Lack of Real-time software to prevent Discrepancy

in product information between Original
manufacturer & Online retailer due to irregular
updates which increases customers dissatisfaction

* Easy shopping through Mobile Apps available on

various platforms for mobile shopping .
* Integration of various payment gateways like
PayPal, Bill desk with online Retailers to reduce
transaction time & increase security.
Better promotion of products through integrated
platforms like Web portals, online alerts etc.
* Advanced Supply chain modules & RFID Technology
to track Inventory , orders as well as monitoring
delivery .

Failure to implement Data Mining tools as in west

to study consumer behaviour and low conversion
rate as compare to Traditional customers which can
lead to revenue based segmentation of existing
customers and in designing promotional strategy
for Omni-channel and prospective new customers.
* Lacking in Supply Chain Mastery which is a key
driver to attain competitive advantage.

RFID TECHNOLOGY

LEGAL + + +

* 100% FDI in Wholesale & Cash & Carry model has

been allowed & not in B2C which could have serious
implications for online players.
* Very few states in India allows direct procurement
from farmers. Such regulations allows Online retailers
to maintain competitive advantage vs Brick & Mortar
retailers.

LEGAL - - -

*Legal issues regarding the place of taxing sold

products is still affecting retail sector.
*Predatory price issue has been raised by many
retailers which may compel government to come
out with price regulation in case of Online
Retailers.
* Lack of General and Service TAX (GST) poses a
very complex Indirect tax system in India.

ENVIRONMENTAL + + +
* Soaring rental rates are impediments to Traditional
retailers which presents an excellent opportunity for
online retailers to expand rapidly.
* There is a lack of properly trained workers with low
entry quality and lower wages as compare to other
sectors , leading to higher attrition rates. Online
retailers do not face such problems as they usually
outsource their freight requirement to third party
logistics.
* Metro & most tier 1 & some tier 2 cities posses
reasonably well logistics services which ensures on
time delivery.
* Online Retail venturing is not as capital intensive as
compare to Traditional Retailing .
* There are still very few players in the online retail
space considering the revenues it posted in recent
years (INR 644Billion) in FY 2012-2013 CAGR 27.3%.
So companies can scale up taking the early starter
advantage.
* Favourable Demographic factors (65% Of Population
below 35) adds to growing online Retail growth
story.

ENVIRONMENTAL - - -

* Traditional Retailers are also contemplating on

multichannel presence which can pose serious
challenge to Online retailers in near future.
* Concepts like Immersive shopping (Virtual
wearing ) are being promoted to cope with on line
retailers .
* Delayed deliveries are leading to low conversion
rates specially during peak season and leading to
customer dissatisfaction.
* Some OEMs have recently raised the issue of low
pricing by Online retailers and asked them to
rationalize the discount level barring few like
Samsung.
* Consumer skepticism vs Brick & Mortar retailers is
also a serious problem in getting new customers.

THANK YOU
ASHIMA SAXENA