Flipkart 404

We are sorry to interrupt our regular programming to bring you this special post on a few critical marketing lessons from Flipkart’s ‘Big Billion Day’ fiasco. In this post, we observe how the basic rules of services marketing and brand building were ignored in conducting Monday’s event. This surprises us, as we simultaneously acknowledge and appreciate the enormous time, money and efforts invested by the Flipkart team in bringing this colossal sale to bear.

In many ways, we can sense the missing inputs of a seasoned branding or marketing strategist in planning and executing the ‘Big Billion Day’ (BBD) event, which could have ideally saved the day for Flipkart. Without much ado, let’s point to some obvious and not-so-obvious observations and lessons from the BBD event, so that you, as a marketer, don’t have to repeat these mistakes.

Set the right objective or target: Flipkart’s leadership team has on various occasions spoken or indicated that their marketing efforts as directed towards (a) retaining and growing market share (through aggressive brand building) and (b) growing category awareness for online retail. Ironically, their stated objective for the BBD was $100 million worth of sales in GMV. Our concern with this objective is not that it is highly tactical (more in nature of stock clearing or inventory moving), but more critically, it does not sync with their marketing direction as set out in (a) and (b) above. If Flipkart had also retained its focus on ‘brand building’ while setting its BBD objective, it might have scaled down its sales target, but possibly would have achieved the target with largely flawless service delivery – making it a win-win play for the brand.

Sync your tactical planning with your strategy, and strategy with your business goals: Flipkart faltered in running a Cyber Monday-style sale ahead of the big festival (Diwali), and not after it. If the date was indeed sacrosanct, Flipkart would have been much better off running a highly curated sale on a limited range of products, but with significant stocks available. An all-out discount sale (the kind Flipkart ran on Monday) is always about moving inventory. It also always runs directly counter to any viable brand-building strategy.

Manage your customers’ expectations: The fastest way to run a services business to the ground is to over-promise and under-deliver (to your customers). In all its tens of crores of advertising, never once did the company drew consumers’ attention to the fact that the stocks of many products may be limited, and could therefore be sold out in seconds (let’s assume they knew this would happen, from their multiple Xiaomi sales experiences). Worse, it also severely underestimated the possible loads on its servers, leading to frequent site loading errors. The next point is closely related.

Manage the moment of truth: Flipkart flouted the golden rule of services business marketing when it lured the many hundreds of thousands of first-time online shoppers to their website, and then failed to manage their moment of truth (more on this topic here). Now, it is very important to understand that for most shoppers yesterday (even regular online shoppers), the closest reference point to the promised online sale was an offline sale (the kind that Big Bazaar or shopping malls run for end of season). In an offline sale, what is already sold out (and no longer in stock) is not visible to the next potential buyer. Let’s explain it with an example: when out shopping in a store running a discount sale on smartphones, if your favourite phone model is sold out, you don’t actually see any vacant shelf with an ‘out of stock’ sign hanging. The product has simply vanished. You may feel disappointed, but you’re seldom angry and never feel ‘cheated’. On the other hand in the case of Flipkart, seeing ‘Sold out’ signs on desired products with all other details perfectly visible (including picture and price) simply infuriates the customer, and delivers an experience that is distinctly and supremely bad in mouth compared to the a similar situation as one would experience in an offline store. This is an important lesson in how not to treat first-time online buyers in particular, but any online buyer for that matter. To remedy this, Flipkart should have used technology to auto-exclude all ‘sold out’ items from the page, so that these were not even visible to the next potential customer.

To sum everything up, in running its Big Billion Day sale, Flipkart went after the wrong target or metric that did not sync with either its marketing strategy or its business goals. The company paid little attention to the ground rules of brand building, and has paid the price in earning severe customer backlash, a significant loss of goodwill and negative press running into multiple pages. What is worse, Flipkart’s troubles in conducting its sale have evidently benefited its arch-rivals richly; with both Amazon India and Snapdeal reporting Monday as their best sales day ever with nary a discernible customer outrage. Outside of its success in actually moving $100m worth of inventory in ten hours flat, conducting the Big Billion Day sale might just have turned out to be a very expensive marketing blunder for the company.

Is there any redemption for Flipkart after all? In the absence of hard data, we cannot really ascertain the damage done to the Flipkart brand (and we simultaneously do hope that Flipkart has already commissioned a regular brand tracker study so that at least the team will know). Also, there is an intriguing argument that Flipkart may get away with little long term damage to the brand, simply because it is part of the online retail category that on account of being discounts-driven, does not naturally build any emotional bond with the consumers. Time shall tell.

In the meantime, one way to reverse some of the damage that we cannot recommend highly enough is by going back to another golden rule of services marketing, concerning the service recovery: if a service delivery was compromised in any manner to any customer, make it doubly up. Flipkart must therefore walk all the extra miles it needs to to reverse all involuntary cancellations. Yes, every single one of them. As for the cases where potential customers actually saw the prices shooting up within minutes, or just couldn’t buy an item that went ‘out of stock’ within seconds, even we are at a loss to imagine just how can Flipkart possibly ‘make it doubly up’ to them.

Note: This is a slightly edited version of the post that was originally published.

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