Business Model of FlipKart _ How Does Flipkart Make Money

UnicornomyThe Unicorn Economy Decoded B2B / B2C / E-COMMERCE / MARKETPLACE / AGGREGATORS / INDIAN UNICORN STARTUPS / TECH STARTUPS Business Model of FlipKart Posted on March 12, 2016 by Unicorn Economy / 23 Comments Business Model of FlipKart: An Analysis by Unicornomy.com FlipKart.com the Indian Unicorn – The poster boy of the Indian StartUp Ecosystem, is the center of attention in everyone’s living room at the time of shopping for near and dear ones. While shopping and looting the numerous discount offered by the e-commerce giant many a times people wonder how on earth does FlipKart make Money?  Does Flipkart even make money?  What is the Business Model of FlipKart?  How long would FlipKart continue to give discounts to lure customers in?  Here is a comprehensive analysis of the ECommerce Giant’s Business Model for the aspiring learners. Yes it’s now headquartered in Singapore.About FlipKart. Ltd. Business Model of FlipKart (FlipKart. (Bought over from FlipKart Online Services Pvt. Flipkart. Founders. Ltd. Direct via Tele Sales (Customer calling and Placing order – Happens rarely now) . Facts. Ltd. Excluding the Credit Line from ICICI Bank of 450 Cr). Downward Final Valuation of about 11. Valuation of FlipKart  as in Jan’2016: 15 Billion USD (Larger than BigBazaar) recently Morgan Stanley downgraded FlipKart’s Value of shares held by them by 25% i.com Employees).   Thus the core bread and butter of the Model is “X% commission on the total sale value given to the seller” The sale can happen via multiple channels as listed below & For all the sale achieved by FlipKart for a particular seller FlipKart will charge a percentage (%) cut on the total sale amount excluding taxes. FlipKart Founders: Founded in 2008 by Sachin Bansal & Binny Bansal (Both Ex-Amazon. Funders & Funding Before we move on to the Business Model of Flipkart or on how does FlipKart make money. Direct via Website 2. Ltd. Singapore.  This Singapore based company owns majority of other companies and is a complex structure of many entities inter-held by various other companies ultimately owned by FlipKart Pvt. customers ordering the goods for delivering in India.5 Billion USD.) which in turn is owned by FlipKart Pvt.  The model here is : Portal > List Sellers who sell the desired portfolio products > Get customers browsing through the products > Create appealing discounts > Customer Shops for the desired products > Seller / Flipkart ships the product to customer > Product Accepted and Not returned back > Seller gets his agreed price of the product minus the commission charged by FlipKart for doing everything they do. for Indian customers or atthe-moment.25 Billion USD. Direct via Mobile App (Android or iOS or others) 4.com Website) How Does FlipKart work: Flipkart is an e-commerce portal. (as of Janurary 2016. Singapore (This structure is covered at the bottom in detail). 1.  FlipKart is essentially an “E-Commerce” company selling a wide variety of goods from ear-phones to high end consumer electronics and everything in between the two. Funding received by FlipKart: Appx 3. here are couple of things you should know about FlipKart: Contrary to the belief that FlipKart today is an Indian Company – This is not true anymore. Direct via Web-App 3.com is the name of the website owned by FlipKart Internet Pvt.e. B2C shopping Portal.  It may range anywhere between 5% to 20% of the sale value (excluding taxes and discounts).  The following is an e. Web Portal (E-Commerce : Highlighted Above so not getting into the depth of this) 2. a Stereo. Via Affiliate networks (Bloggers. Myntra (Competing with its own online fashion category but a big boost to the overall online fashion for FlipKart) . now the numbers here are small and are taken for the ease of calculation in actuals these numbers are hefty and run into billions of dollars (Ref: Total Loss of Flipkart for FY 14-15 was about 2000 Cr). of how the billing of FlipKart sale will be recorded in FlipKart’s financial books: Customer A. Following are the various revenue lines that FlipKart has for additional sources (allied to its core business) of revenue: 1. Web Portal Listing Fee and Convenience Fee  (Sellers charged listing fee for selling on FlipKart and Customers charged Convenience Fee for faster Delivery) 3.5. Review Websites etc) 6. FlipKart Digital Media (Selling Ads (to sellers and brands) and other related products like co-branding and co-advertising) 6.   There are other Revenue and Business Lines as well that FlipKart has.  Invoice for the Month for FlipKart looks like below table (Click to Expand): The total of Col I will be the total revenue of FlipKart from that particular sale. it is registered in Singapore and has many more subsidiaries to carry out related businesses to diversify and derisk its revenue model from those of the competitors. Website shows no more subscriptions by any one – seems on the way to shutdown for 3rd party users) 4.   This is the basic bread and butter for FlipKart. You may also be Interested in Reading: Amazon Business Model Business Model of FlipKart (Company as a Whole) Now as I mentioned earlier in the above section that FlipKart is not an Indian Regulated company any more. A Mobile Phone and a Bed sheet from 3 Sellers. Logistics (FlipKart Logistics Pvt Ltd Singapore – To ship products of sellers) 5. B & C Purchase 5 Products from FlipKart in a month and these products are a Book.   These are outlined and explained in details below. A Fridge. Coupon Websites. Payment Gateway (Governed by FlipKart Digital Pvt Ltd Earlier and now owned and operated by FlipKart Payments Pvt Ltd Singapore.g. Social Buy The percentage commission varies on the type of product and the type of sale that FlipKart makes. 00% to 3.com) .  I will give an overview of the various modes of payments here.25%).00%) of the transaction amount. Business Model of FlipKart Digital Media FlipKart sells three kinds of Ads as follows: 1.  This is for a handsome fee that FlipKart counts as the total revenue.   Logistics company charges sellers as other courier companies to deliver their goods to those users who have ordered the same from an E-Commerce Player.  The business model is pretty simple they charge a transaction processing amount to every transaction that goes through their payment gateway infrastructure.g.7. later on it got spun off (removed from FlipKart) as a different entity that now ships for all platforms.  Charges are flat depending on within city or inter-city or size of the package. No description below) 9.50%) – So depending on the mode that the user selected to make the payment the e-commerce company will get an amount after retaining the transaction processing charges e.5% to 2. FlipKart Nearby (FlipKart’s Grocery Division – Now Shut Down.  Also the convenience fee billed to customers for gift wrapping. Business Model of FlipKart Payment Gateway – PayZippy You may also be Interested in Reading: How does PayTM Make Money PayZippy is a payment gateway just like any other of the 1000’s of payment gateways out there and provides service to FlipKart and the likes of other E-Commerce players out there.75% to 1. American Express Cards (3.65 (1000 * (1-3%*(1+14.  How payment gateways make money is something that you need to read in detail. Business Model of FlipKart Logistics Earlier EKart Logistics used to exclusively deliver FlipKart Sellers and ordered products.   Basically transaction processing charges differ from mode to mode like it is lowest in Debit Card and Net Banking (around 0. Co-Branded Banner Opportunities on Home Page:   The Slider that you see on home page of FlipKart presents opportunities to lots of sellers. Product Launch (Unofficial – I think they do charge people to launch a product on their MarketPlace) Business Model of FlipKart from Listing and Convenience Fee FlipKart might start charging (or may already be charging) a listing fee for the sellers to be able to sell on its platform. I buy a Book for 1000 INR and pay using AMEX Cards via PayZippy the selling e-commerce portal from where I bought the same would get 965.  Credit Card (1. faster delivery add up to the total revenue of the web portal. (Picture Source FlipKart. brands and product launchers to present themselves to the millions of pageviews that FlipKart generated on a daily basis. FlipKart Cash and Carry (FlipKart’s wholesale division) 8.  And similarly for other payment modes the transaction processing fee will be retained by payment gateway.5% ST))). which eventually adds up to the total revenue of the company. daily visits and page views offer a fantastic way to launch any new product in India. FlipKart’s algorithm decides which sellers products come at the top.  Its very similar to other cash and carry businesses (like Metro Cash and Carry) which is dedicated for Retailers.  For e. Targetted Search Results:   The moment you search for a product. but they will as news suggests) Business Model of FlipKart from Myntra FlipKart has its own Fashion Category but the sales and revenues that it achieves from Myntra is pretty high as compared to its own sales. 3.g. You may also be Interested in Reading: How does Myntra Make Money Business Model of FlipKart from WholeSale (Cash and Carry) FlipKart recently started the cash and carry arm which caters to wholesale of goods to its seller base.2. WholeSellers (Basically B2B) the revenue from this line will be exactly similar to the Web Portal Revenue that FlipKart gets from selling goods on its platform. If it’s a new phone that is being launched and FlipKart hits the newspapers with a front page ad (the cost of ad is shared with the other brand that is advertising the product).  This space can be sold by FlipKart for additional revenue (I don’t know whether they are doing this as of now.g. Business Model of FlipKart from Product Launch FlipKart’s enormous user base.  This gave FlipKart revenue in terms of margins on product sold for Xiaomi and the advertising revenue from launching the products on its own platform.  The revenues of Myntra are also accounted in FlipKart’s total earnings. You may also be Interested in Reading: How does SnapDeal Make Money . Co-Advertised Physical Product across Publications:  The large ads that you see in newspapers and front pages of the magazines (if any) are shared with the brand that they are advertising. Xiaomi launched all of its phones and other products exclusively in partnership with FlipKart in India. E. Flipkart Revenue Model.  Hope you love reading this.This was the ultimate combo of the Business Model of FlipKart from all its revenue models across the product chain and user base.Unicornomy Analysis . Disclaimer: The analysis of the business model of FlipKart or How does FlipKart Make Money is of the Author’s himself. facts and figures are either obtained through secondary web research or interrogation of the users / sellers or other resources on the web. stats.  Please share and drop comments for any queries.   Business Model of FlipKart. How does Flipkart work. Does Flipkart Make Money. neither the company (FlipKart) or its affiliates have confirmed the same to the author and the descriptions. FlipKart Valuation. Flipkart Business Model. Please use your own discretion to use this info when required and by continuing to read you agree to indemnify the author from all liability arising out of using this info on your own. Revenue Model of Flipkart Unicorn Economy  View all posts by Unicorn Economy → 23 Comments Pingback: Analysis of a Payment Gateway Business Model Pingback: PayTM Business Model & How does PayTM Make Money Pingback: Amazon Business Model and How does Amazon Make Money Pingback: Business Model of Myntra . How does Flipkart Make Money. Flipkart Profitability. Amazon hasn’t made money in 25 years. Thanks. Sam April 15. both .. We have about 4 years to go before everyone realises how poor the fundamentals of these companies are. 2016 at 12:02 pm Yes. Regarding bubble time will tell. Sam April 14.. After 25 years! And their stock got hammered that day. but with amazon.Pingback: How to Make a Killer Deck with this Pitch Deck Template Dushyant Sawne April 14. The internet bubble in the US burst in 2000. 2016 at 12:37 am Hi Sam. Was looking for such an explanation for long. As usual.S.com and AWS are 500 Million USD profitable since last financial year. Unicorn Economy  April 14. 2016 at 12:29 am Ecommerce in India is a bubble. . 2016 at 12:27 am Fantastically put. we’re 20 years behind the US. 2016 at 12:37 am Thanks Dushyant. P. Unicorn Economy  April 14. Thanks for dropping by. if you can. Clear. . 2016 at 12:37 am On the way Chaitanya April 14.pupul koley April 14. Original content. Will look forward for you to decoding other ventures. Kunal Bansal April 14. can you also do snap deal ? they have three four investee co. which do not go with their ecomm model. 2016 at 12:35 am superb analysis.Bookmark your site (first time I ever bookmarked any website based on one article) Unicorn Economy  April 14. both in pipeline. Appreciate it. 2016 at 7:51 am Great read. crisp and easy to understand. 2016 at 10:44 am Thanks Chaitanya. want to eagerly read that. Unicorn Economy  April 14. 2016 at 1:54 pm Great Article. Unicorn Economy  April 14. Please keep doing this work. 2016 at 5:39 pm Thanks Kunal. Will like to see AirBnB and Alibabas Business model. tx. 2016 at 5:44 pm Thanks Ayush.ayush singhal April 14. but also because of high marketing expenses and user acquisition cost. Pingback: Unit Economics & Growing Your Startup 100X Pingback: Business Model Examples Ultimate and Definitive Guide Pingback: SnapDeal Business Model and How Snapdeal Works and Makes Money . Unicorn Economy  April 14. not only by selling at discount.subscribe the newsletter. 2016 at 6:37 am Simple and to-the-point. 2016 at 4:30 pm really appreciate your work analysis. Senthil April 27. 2016 at 12:39 pm Yes. can you work on servicing and logistics sites. Many thanks! Question – Flipkart gets commission on the ‘listed’ price from the seller but makes (or has been making) losses because it sells at a discounted price ? Unicorn Economy  April 27.so we connected with you and get updates time to time. © 2016 Unicornomy Powered by Eyes and Brain | Business Model Analysis by Unicorn Economy .