The month of October witnessed the Indian e-commerce giants leaving no stone unturned to woo customers and gain a share of their wallet. The media was abuzz with news of the myriad offers and schemes that were being showered on customers. All of us, directly or indirectly, have been impacted by this rapidly escalating e-commerce competition. As marketers, we can learn a lot from this.
The Big Billion Day hype started somewhere in the last week of September. Sachin and Binny Bansal, co-founders of Flipkart, proclaimed October 6, 2014 to be “India’s largest e-commerce sale” and they used multiple channels to send this message across – both to customers and competitors. Personalized emails were sent out to a large number of Flipkart’s consumers, inviting them to participate in the bonanza. The message read, “To celebrate Flipkart’s journey, we are going to have a sale to end all sales. The Big Billion Day Sale is on the 6-10-2014...and the date is no coincidence. The day 6-10 marks the number of the flat we started out from.” In addition to the mailers, giant billboards were set up at prominent locations advertising the Big Billion Day. The message to Amazon CEO Jeff Bozo was clear – You may rule the online market elsewhere, but in India, Flipkart will always be the BIG thing. The other e-commerce retailers frantically scurried to combat this aggressive push from Flipkart. Snapdeal and Amazon struck back with their own promotion offers. Amazon hosted a Mission to Mars celebratory sale from 4 to 6 October to coincide with the Big Billion Day. Snapdeal also launched its festive sale with hourly offers on products and lucky draw raffles. So who came out ahead?
Flipkart had announced massive discounts, ranging from 30 to 40% on electronics like LED TVs, DSLRs and Samsung mobile phones. Karbonn cellphones were being offered at INR 1, Gio Analog watches at INR 99, and Nokia 1020s at INR 19,999. Sounds too good to be true right? Well, for the average consumer, it was. By 08:10 AM, just 10 minutes after the start of the sale, Flipkart had run out of stock. By 09:00, the number of visitors on the site had reached a breaking point and the server crashed. Customers started receiving the dreaded 404 Error. Glitches in Flipkart’s back end IT system were causing incorrect prices to be displayed for many products, leading customers to believe that Flipkart had marked up the prices before giving a discount – an artificial deal. Irate customers started tweeting and by the end of the day “#flopkart” had climbed to be among the top ten #. Facebook was also full of people trolling Flipkart. According to Simplify360, negative sentiment around Flipkart’s sale reached 12.5% from 4.7%, decreasing the positive sentiment from 24.5% to 16.5%. Amazon and Snapdeal were rubbing their palms with glee at this massive failure. Snapdeal was scooping up customers who could not find their product on Flipkart with similar deals. A few hours into the sale, Amazon bought the domain name www.bigbillionday.com. That way, any user now searching for big billion on Flipkart was automatically redirected to the Amazon India website.
So what was the result? At the close of the sale, the Bansal’s extended an apology to all the consumers who had had a bad experience on Flipkart.com. The apology was sent via e-mail to all its registered users and also published in a blog which can be found at http://blog.flipkart.com/apologies-from-flipkart/. Many of the big brands selling on Flipkart were angered at the “cheapening” of their products. Flipkart claims to have gotten a billion hits and recorded sales of USD 100 million in merchandise value. Snapdeal also claimed sales of INR 1 crore per minute, grossing close to Flipkart’s sales figure.
After a lull in mid-October, the e-commerce war re-ignited in Diwali with Amazon launching its week long Diwali Dhamaka sale, fully equipped with the learnings from Flipkart’s failure. They invested significantly into technology to ensure that their servers did not crash. The week long sale also meant that buyers had a longer window to shop and thus were less likely to swarm the site en-masse. In retaliation of Amazon’s rebuke of the big billion day, Flipkart purchased the domain www.diwalidhamaka.co.in which redirected users to Flipkart. Only time will tell how this battle will end. However, the war has just begun and this can only bode well for the customer.
Apart from the fierce competition and angry customers, Flipkart has to undergo scrutiny by Government. Commerce minister Nirmala Sitharaman has launched investigation on Flipkart. Sale of goods at undercut prices, violation of Foreign Exchange Management Act and predatory pricing are the few accusations which brought Flipkart under Radar. This has prompted government to enforce laws and policies on this sector.
So what can we take away from this?
1. Timing is key. A well placed advertisement or digital rebuke rules in this digital age. Snapdeal’s advertisement in the Times of India and Amazon’s purchase of the URL (both on October 6) stole Flipkart’s thunder.
2. Customers are unforgiving. They are fickle and will not mind switching to someone who is giving them a better deal. After Flipkart’s fiasco, many customers jumped ship to Amazon and Snapdeal. Before raising customer expectations, companies need to be sure that they are equipped to deliver.
3. Transparent and proactive communication can help salvage a lost situation. Flipkart’s apology at the end of day surely earned them a few brownie points and softened the hearts of at least a few customers.
Sayali Patil – A PGP2 at IIM A, Sayali is currently pursuing her hobby of writing. She is an avid reader and likes to read fiction, non – fiction and anything other than course material. :P Passionate about social causes, she has taught under-privileged children and worked on education sector. You can follow her on InsideIIM at sayali13.insideiim.com