Update: See below for an Update posted on September 14, 2014
Flipkart.com used to be a market leader in the e-retailing industry. Once upon a time Flipkart used to be synonymous with quality service and trust. However in recent months, Flipkart seems to have become a commercial venture which has lost track of quality service and has dwindled distribution nodes. At least that seems to be the conclusion drawn from its lack of distribution nodes in major cities of South India.
For the past few months, Flipkart has been notable by the absence of distribution partners for mobile phones and other electronic equipment in major cities in South India. Cities like Thiruvananthapuram, the capital city of Kerala; Cochin, which is called the commercial capital of Kerala are places where Flipkart does not deliver electronic goods to. The situation is similiar in other cities of South India, except perhaps Chennai and a handful of other metropolitan cities. This has prompted customers to comment whether this once giant in the e-commerce industry is on the verge of decline, since reducing distribution outlets in major cities is often the first sign of cost cutting and reduced profits.
That this has occurred in recent weeks when Flipkart has tried to market its “Flipkart First” subscription service which guarantees “same day” delivery to multiple cities of India is ironic. One wonders whether Flipkart has the logistical infrastructure to undertake this venture, the first step of which should have been securing a dense distribution infrastructure, at least within major cities of South India. Flipkart’s move may perhaps be a cost cutting exercise in the segment it was once renowned for, and it may be a sign of it concentrating more on the clothing segment, as suggested by its recent acquisition of Myntra.com.
Flipkart also seems to lack the hardware infrastructure to handle large number of transactions. On May 23, when Moto E was restocked, Flipkart.com’s server became offline for hours at a stretch and the mobile app became unresponsive.
Flipkart has been the sole delivery channel of Motorola in India. Motorola has enjoyed a massive support from userbase in India for its recent launches, the Motorola E and Motorola G. These launches have so far been a novelty unavailable across major parts of South India, thanks to Flipkart’s lack of a delivery network in this region.
When contacted, Flipkart’s Farheen M. from customer support responded that Flipkart does not have any immediate plans to consolidate its delivery channel in South India. He responded by saying, “Kindly note that the availability of service in a locality is based on several factors like the products, the coverage of us for this servcourier partners used by ice and the policies of the respective sellers. Unfortunately, at this point of time, the mobiles cannot be delivered to the pin code ..(all cities in Kerala) .. by any of our sellers. We are unable to provide an approximate time frame on the availability of service in your location for the mentioned product.”
It makes one wonder whether Motorola should have chosen a better partner for distributing its mobile phones, an e-retailer with a more diverse and solid infrastructure. However in the e-commerce sector, companies rise and fall, and Flipkart.com may well be replaced by globally acclaimed brands like Amazon.com (amazon.in).
Already companies like Amazon.in are proving to be a staunch competition to the homespun Flipkart.com and customers have already started moving away from Flipkart.com even in their once secure stronghold-online book sales. Flipkart used to provide books at a competitive rate, excellent delivery and post delivery service via its Easy returns policy. Unfortunately for Flipkart, Amazon.in now matches prices and in many cases undercuts Flipkart’s pricing for books, and delivers books and other goods even on the same day. It’s easy to predict that Flipkart is going to see a massive decline in user base over the coming months, given their lack of a solid delivery infrastructure.
Update on September 14, 2014:
It was perhaps a bit too premature to put the blame on Flipkart. The real issue was a standoff with the Commercial Taxes Department of Kerala. According to newspaper reports that came in over the next few days, stopping transactions with customers in Kerala was due to the Commercial Taxes department starting to charge VAT on products delivered to Kerala. Since the items had already been taxed at the source of shipment this amounted to double taxation and non-viable for online stores. The Government also prohibited Cash on Delivery orders stating that these shipments had not paid taxes.
Online shopping is a huge boon to citizens. Since it does away with profits by middlemen, and to a large extent does away with mass media marketing, stores are able to price items at a fraction of the amount at which it is available at retail outlets. As a mechanism of transferring profits to the enduser, it should be considered as a boon, and not as yet another golden goose slaughtered before its time.
As of today, products sold directly by Flipkart (WS Retail) are the only items that can be shipped to India by Flipkart. Jabong and Shopclues.com are other sellers which have completely stopped shipping to Kerala. Yebhi.com as of now redirects purchases to Jabong (buyout?), and hence that’s another option gone. Myntra was bought out by Flipkart and along with Amazon.in are some of the few remaining sellers who ship to Kerala. Around three quarters of sellers on Snapdeal.com have stopped shipping to Kerala while a few still do.