CLICKING TOWARDS GROWTH IN A VOLATILE, UNCERTAIN, COMPLEX AND AMBIGUOUS ENVIRONMENT - A STUDY ON THE STATE OF ONLINE RETAIL INDUSTRY IN INDIA - IJSTM
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CLICKING TOWARDS GROWTH IN A VOLATILE,
UNCERTAIN, COMPLEX AND AMBIGUOUS
ENVIRONMENT - A STUDY ON THE STATE OF
ONLINE RETAIL INDUSTRY IN INDIA
Mr. Sudeep B Chandramana1, Mr. Arun Prem2,
Ms. Preetha G Panicker3
1,2,3
Assistant Professor, Department of Management Studies, MACFAST, Thiruvalla, Kerala
ABSTRACT
Increasing internet and mobile penetration, growing acceptability of online payments and favourable
demographics has provided online retailin India the unique opportunity for companies to connect with their
customers. The online retail market is expected to grow from US$ 6 billion to US$ 70 billion during FY15-
FY20. Increasing participation from foreign and private players has given a boost to Indian retail industry.
India’s price competitiveness attracts large retail players to use it as a sourcing base. While the growth in this
sector excites entrepreneurs and financial investors alike, some serious challenges are beginning to weigh down
on the sector. While a few well-funded players, like Flipkart, Snapdeal and Amazon have succeeded in
establishing brands and conquering large parts of the market, none of these major players have shown a profit,
and few have even shown enough revenues to cover overhead after the cost of goods and deliveries. Problems
with supply chain infrastructure, payment gateways and management of payment costs, tax related issues and
intense competition have created an environment in which companies are struggling to survive. As a result,
investors are holding their money close, creating a funding drought just as the industry hits major growing
pains. As one of the fastest growing sectors in India in recent years, the megatrends that will shape the online
retail sector and the emerging challenges faced by the market leader and followers in online retailindustry is a
significant area for research. The present study is a conceptual survey with a descriptive approach and is an
attempt to explain the concept of online retail, business models for e-commerce, various trends in online retail,
challenges before the sector in India and the practices followed by the market leader with respect to a volatile,
uncertain, complex and ambiguous (VUCA) business context. A framework has also been adopted to compare
the market leader’s performance with its nearest competitor.
Keywords: online retailing, eCommerce, volatility, uncertainty, complexity, ambiguity, VUCA
237 | P a g e
I. INTRODUCTION
In the last two decades, rising usage of internet and mobile phone penetration has changed the way people
communicate and conduct business. E-commerce is relatively a novel concept. It is, at present, heavily placing
on the internet and mobile phone revolution to fundamentally rework the way businesses reach their customers.
While in countries such as the US and China, e-commerce has taken significant strides to achieve sales of over
150 billion USD in revenue, the industry in India is still at its early stages. However, over the past few years, the
sector has grown by almost 35% CAGR from 3.8 billion USD in 2009 to an estimated 12.6 billion USD in 2013
(Source: Internet and Mobile Association of India research report,2014). Though, the current share represents a
miniscule proportion (less than 1%) of India‘s total retail market, it is poised for continued growth in the coming
years. If this robust growth continues over the next few years, the size of the onlineretail industry is poised to be
10 to 20 billion USD by 2017-2020.
There exist a relationship between globalization, ecommerce adoption that lead to business performance and
effectiveness (BhattacharjeeSarathiPartha, Saha Kumar Anish, Begum AraSahin, 2012). Doing business in a
rapidly changing environment, especially in turbulent times, is a challenge for any player. VUCA is an acronym
used to describe the Volatility, Uncertainty, Complexity and Ambiguity of general conditions or situations. The
in depth meaning of each element helps one to improve the strategic worth of VUCA foresight and insight.
Thus, from an organizational perspective, taking right decisions in times of uncertainty and chaos demands new
approaches and sharper business strategies.
1.1 Objectives of the Study
1. To study the growth of online retailin India and the factors contributing to the growth
2. To examine the prospects and challenges associated with the online retailbusiness in a VUCA context
3. To suggest positive recommendations for survival and growth of online retailin a VUCA environment
1.2 Research Methodology
Scope of the Study:The scope of this research paper is confined to study of online retailindustry in
India.
Source of Data:The study is descriptive in nature and is based on secondary data collected through
published books, business magazines, journals, newspapers, web sites and other research works.
Framework of Analysis:Analysis of data and information collected from published sources were made,
keeping in mind the objectives of the study.
II. AN OVERVIEW OF INDIAN ONLINE RETAILINDUSTRY
Online retail or online retail (electronic retail) is the fastest growing channel globally, as confirmed by the
Planet Retail‘s retail panel data. Global B2C (Business-to-consumer) e-commerce sales reached 1.2 trillion
dollars in 2013, of which 29.7 percent were generated by the United States. B2C is a form of e-commerce
whereby a transaction is conducted directly between a company and a consumer. The US share of global e-
238 | P a g e
commerce has been slowly but steadily decreasing, whereas China‘s share has skyrocketed, nearly tripling
between 2010 and 2012, demonstrating the broader economic trend of power shifting away from the United
States. As a result of the spread of the internet and digital payments, the number of digital buyers is also
growing and was expected to increase to over 1 billion people by the end of 2013, nearly one-seventh of the
world‘s population.
The adoption of technology is enabling the online retail sector to be more reachable and efficient. Devices like
smartphones, tablets and technologies like 3G, 4G, Wi-Fi and high speed broadband is helping to increase the
number of online customers. The homegrown players have shown tremendous growth and attracted some big
investors. The entry of global biggies like Amazon and Alibaba has taken the competition to a new level. Online
retailers are differentiating themselves by providing innovative service offerings like one-day delivery, 30-day
replacement warranty, cash on delivery (CoD), cashback offers, mobile wallets, etc. The supply chain has
improved significantly and online retailers are even leveraging on the services of Indian Post for greater reach
across the country. The sector is still in its growth stage in India and has enormous potential to offer in the
coming years. The government‘s most prestigious Digital India project could take the sector to new heights.
Although B2C e-commerce is often used synonymously with online shopping or online retail, it also spans
growing categories such as paid online services or paid content. Other B2C services include travel
services, online payment providers, etc. Paid content, such as digital video, music, and books, has exploded in
recent years with the growth of companies in these verticals. The online channel is expected to grow at a much
faster rate vis-a-vis more established channels as is expected to account for 10.1% of overall retail sales in 2018,
up from 6.5% in 2013, and 3.5% in 2008 (Source: Deloitte Study on Online Retail in India Clicking Towards
Growth, 2014).In 2012, the average B2C e-commerce sales per digital buyer in India amounted to 632 U.S.
dollars, up from 597 U.S. dollars a year earlier. This figure is expected to increase in the future and reach 724
U.S. dollars in 2016 (Source: Statista Report “E-Commerce in India Dossier”, 2015).
Figure 1 : Segments of B2C Online Retail Business
239 | P a g e2.1 Magnitude of the Market
India is one of the world‘s emerging markets in terms of e-commerce. The recent past has seen online sales
improve in a number of ways. Increased internet availability means more people are logging on and choosing
internet retailers to supply their needs. The number of digital buyers in India, aged 14 or older, is a huge factor
in this growing market. In 2011 were estimated at 14.5 million nationwide. This number rose to 19.2 million in
2012 and forecasts predict that the number will exceed 40 million by the end of 2016. In 2013, retail e-
commerce sales amounted to 3.59 billion US dollars and are projected to grow to 17.52 billion US dollars in
2018. (Source: Statista Report “E-Commerce in India Dossier”, 2015).
Figure 2 : Online Retail sale in India from 2012-2018 (in billion US Dollars)
2.2 Enabling Factors
A number of business models for e-Commerce have evolved and are in varying stages of maturity. Of the
various business models that are prevalent, consumer e-Commerce is perceived to have a wider and stronger
impact on retail or direct consumer and has engaged entrepreneurs, VCs/ PEs and others. As India moves
towards becoming a consumption driven economy, this consumer centric model presents a very large and
transformative opportunity. Various demand and supply driven factors aided by dynamics in external
(government/ regulatory) environment are supporting the growth of the industry. Favourable demographics,
increasing number of urban households, growing internet penetration in smaller towns and rural areas,
proliferation of mobile devices and emerging need for convenience, choice and access are acting as prime
movers from the demand side.
240 | P a g eThe e-Commerce and allied companies have also turbo-charged the e-Commerce growth engine by introducing
innovative business models, by offering convenient payment options and by introducing technological
innovations and customer friendly policies to capture online time and wallet share. Concepts such as flash sales,
‗by invite only‘ sales, India ‗Cyber Monday‘ or the ‗Great Online Shopping Festival‘ have been smashing hits in
the past and such innovations will continue to play an important role to promote online shopping. These tactics,
in addition to the existing sales, coupons and deals are welcome by the Indian customer. The government and
regulatory bodies are also playing their part by investing in infrastructure and policy support. These bodies have
also initiated awareness drives to get wider users (including SMEs/ MSMEs) on to the e-Commerce bandwagon
The e-Commerce industry offers great benefits to the Indian economy, the customers and the society at large,
especially to small businesses, small merchants, semi urban and rural population.
In recent years, the growth of the global e-Commerce market has made cross-border transactions an intensifying
force in India‘s foreign trade, offering millions of enterprises, most of which are SMEs/ MSMEs, to expand
beyond the domestic market. Over 30,000 sellers sell on eBay India annually to 4 million consumers in 3,311
Indian cities. Over 15,000 sellers export a variety of Indian handcrafted products to 112 million customers in
over 190 countries. It must be noted that this is just the tip of the iceberg. Many small businesses still do not
have their own website, which greatly impacts their ability to reach out to a wider and bigger market. However,
the third party B2B exchanges/ marketplace platforms afforded by e-Commerce is providing the required
firepower for the growth of SMEs/ MSMEs by opening a window to new markets, by shortening traditional
supply chains, and by reducing costs, thereby, leading to higher revenues and profit margins. It is estimated that
the e-Commerce industry is expected to contribute around 4 percent to the GDP by 2020(Source: D&B,
Technopak; KPMG in India analysis). By 2020, the IT-BPO industry is expected to account for 10 percent of
India‘s GDP, according to a NASSCOM report. However, with enabling support, the e-Commerce industry too
can contribute much more to the GDP. The growing industry will also have a positive spillover effect on
associated industries such as logistics, online advertising, media and IT/ ITeS. At present, e-Commerce accounts
for 15-20 percent of the total revenues for some of the big logistics companies. The revenue for logistics
industry from inventory based consumer e-Commerce alone may grow by 70 times to USD 2.6 Billion (INR
14,300 crores) by 2020(Source: D&B, Technopak; KPMG in India analysis).
Currently, the inventory based consumer e-Commerce model alone provides direct employment to
approximately 40,000 people and is estimated to create 1 million direct and another 0.5 Million indirect jobs by
2020. Low entry barriers have attracted many young and enterprising individuals to try their hand at
entrepreneurship. A significant 63 percent of e-Commerce ventures have been started by first time
entrepreneurs. Although many factors support the growth of e-Commerce in India, the fledgling industry is
faced with significant hurdles with respect to infrastructure, governance and regulation. Low internet penetration
of 11 percent as compared to world average of 34 percent impedes the growth of e-Commerce by limiting the
internet access to a broader segment of the population (Source: D&B, Technopak; KPMG in India analysis).
Poor ‗last mile connectivity‘ due to missing links in supply chain infrastructure is limiting the access to far flung
areas where a significant portion of the population resides at. High dropout rates (25-30 percent) on payment
241 | P a g egateways, consumer trust deficit and slow adoption of online payments are compelling e-Commerce companies
to rely on costlier payment methods such as COD (Cash on Delivery).
2.3 MajorPlayers in Indian Online Retail Industry
Several players have established their place in e-commerce market just in few years. With the rising demand of
digital commerce, innovative startups are emerging in all segments. Home grown players are trying to compete
head-on with global players who have the advantage of scale, technology and deep pockets. According to
Deloitte‘s study ―Global Powers of online retail2015,‖ Amazon continues to dominate the world of e-Commerce
with net product sales of $61billion in 2013.
Flipkart is the largest online retailer in India with a valuation of about $11 billion and trying to raise funds to
compete with global biggies like Amazon and Alibaba. Snapdeal is another homegrown player with a valuation
of $5 billion. In October, Snapdeal raised $627 million from the Japanese telecom and media group Softbank,
who also has a 37% stake in China's e-commerce leader Alibaba. Other emerging players are – BookMyShow
with almost 90% of the online entertainment ticketing market; Paytm with almost 20 million users is leading
provider of virtual wallet(Source: Deloitte Global Powers of online retail,2015).
A 2015 study by Morgan Stanley reveals the market share of etailers in India. While Flipkart tops with 44 per
cent, younger rival Snapdeal is a close second at 32 per cent. US giant Amazon is a distant third, at 15 per cent,
according to the report. The remaining nine per cent is with the rest of the companies, whom the report does not
name. The report notes fashion as a segment constitutes 30 per cent of India's e-commerce market. In fact,
Flipkart's fashion offering got stronger after it acquired Myntra in a $300-million deal. Snapdeal, chasing
Flipkart, recently acquired luxury fashion portal Exclusively, indicating the significance of fashion in e-
commerce. Snapdeal is expected to close half a dozen more acquisitions this year at an estimated $1 billion.
Figure 3: Market Share of Online Retail Companies in 2014
(Source: Morgan Stanley, 2015)
242 | P a g eFor Flipkart, 34 per cent of its gross merchandise value (GMV) in 2014-15 came from electronics, followed by
clothes, at 30 per cent. For Snapdeal, too, electronics and fashion are the two biggest verticals, with GMV worth
$5 billion and $2 billion respectively.The Indian online retail market has had a dream run in recent years when it
comes to transaction value, however significant challenges still remain. These challenges are expected to drive
consolidation in the market. If provided with the right regulatory enablers and economic conditions playing out
favorably, the online market opportunity could be substantially higher.
The top three e-commerce companies — Flipkart, Snapdeal and Amazon — are running mega discount sales
now, and typically these e-retailers net 30-40 per cent of their annual sale during this season. Apart from the
evergreen product categories like electronics (including mobiles) and apparel, there is an emergence of new
categories like home and kitchen and furniture, which have seen huge traction in the current year.
Flipkart is offering over 30 million products across over 70 categories, including books, media, consumer
electronics and lifestyle. It claimed to have sold 10 lakh units within the first 10 hours as part of its ‗The Big
Billion Day‘s Sale‘, out of which 75 per cent of the phones sold during were 4G phones. Further, Amazon
increased total number of unique products to 30 million from 18 million and Snapdeal has put together 15
million unique products.
Flipkart has emerged as the favourite online shopping brand for Indian consumers in a recent survey conducted
by SBI Research. Amazon.in has come in second, with Snapdeal rounding up the top three. Flipkart is the
legacy player in e-commerce despite the fact that the company is only just over eight years old and there were
other online retailers in the country (like rediff.com, indiatimes.com etc.) when Flipkart was launched in 2007.
Yet, experts say Flipkart is the ‗real‘ first-mover in Indian e-commerce. Amazon.in, which was launched in mid-
2013, has managed to take the competition to Flipkart despite the big lead the home-grown e-tailer had over the
US company. The fact that Amazon was a big global e-commerce brand worked to its advantage. Though
Snapdeal has come in third, the Delhi-based company has managed to create a very strong brand proposition.
The large pools of capital that the trio have at their disposal has also helped create a loyal brand following.
Figure 4: Vertical-specific Online RetailPlayers in India
Flipkart has raised over $2.5 billion, while Snapdeal has raised over $1 billion with reports emerging that
a further $1 billion funding round is in process. Amazon, in 2014, had pledged $2 billion for its India operations
and news reports state it is readying a $5 billion war chest for India. The companies made the right moves too
with the money, focusing on building operational infrastructure like warehouses and investing in mass media
campaigns to build credibility.
243 | P a g eIII. VOLATILITY, UNCERTAINTY, COMPLEXITY AND AMBIGUITY (VUCA)
3.1 Origin of VUCA
The notion of VUCA was introduced by the U.S. Army War College to describe the more volatile, uncertain,
complex ,and ambiguous, multilateral world which resulted from the end of the Cold War (Kinsinger&Walch,
2012). The acronym itself was not created until the late 1990s, and it was not until the terrorist attacks of
September 11, 2001, that notion and acronym really took hold. It attempts to capture the uncertain and
dynamically changing, situation of a military engagement, where there is a lack of information, events often just
happen in a chaotic and unpredictable fashion in what is also called the fog of war. By all accounts, the chaotic
―new normal‖ in business is real. The financial crisis of 2008-2009, for example, left many business models
obsolete, as organizations throughout the world were plunged into turbulent environments similar to those faced
by the military. At the same time, rapid changes marched forward as technological developments like social
media exploded, the world‘s population continued to grow and age, and major disasters disrupted lives,
economies and businesses. Each element of VUCA explains the factors of organizational failures like system
failures and behavioral failures as follows:
V –Volatility: Volatility refers to the propensity for changing from one state to another.
U –Uncertainty: Uncertainty refers to the lack of specific information, which can be found by
answering specific questions.
C – Complexity: Complexity refers to the number of components, the relationships between the
components.
A – Ambiguity: The Latin prefix ―ambi-―refers to multiple or non-fixed
Figure 5: The VUCA Model
244 | P a g e3.2 VUCA and the business context
In the traditional business environment, an approach to strategy is based on following factors:
There is one optimal goal or solutions
We can fix future projection
We have a Fixed goal
Use of Progress planning
This approach to strategy works fine until there is no volatility, uncertainty and complexity within the
environment. Turning a rapidly changing external environment to firm‘s advantage requires a recalibration of
many dimensions across how to develop, deploy and deliver the strategies The tremendous growth of
globalization, information technology, and a changing environmental context are all working to take business
into a much more complex world. This new world is interconnected, interdependent, nonlinear and volatile. The
business community has been trying to identify the fundamental internal and external conditions that affect
organizations within this complex environment. Thus, VUCA was adopted by strategic business leaders to
describe the chaotic, turbulent, and rapidly changing business environment that has become the ―new normal‖.
Figure 6: VUCA in a Business Context
The VUCA model is helpful in identifying the internal and external conditions that affect organizations today.
This model can be adopted to analyse and explain the volatility, uncertainty, complexity and ambiguity in an
industry and propose recommendations for overcoming the challenges.Bruke (1999) has identified about several
impediments for the growth of online retailing. They are: (i) consumers can not touch and feel products, (ii)
245 | P a g eorders can take several days to be delivered, (iii)shipping costs are often excessive and (iv) customer service is
often poor and (v) returns can be difficult.
IV. VUCA ANALYSIS IN INDIAN ONLINE RETAILINDUSTRY WITH RESPECT TO THE
MARKET LEADER – FLIPKART
The Indian online retailindustry is currently witnessing a number of rapid changes and challenges associated
with a chaotic stage of evolution. Though the e-commerce sector is growing exponentially in India, it faces
several challenges like customer mindset, high cash on delivery (CoD) based orders, reachability, poor courier
services and other policy-related issues. Certain eCommerce players and industry observers have raised
concerns that deep discounts, free shipping, intense competition and higher rejection rates due to cash on
delivery (CoD) have impacted online online retailadversely. Some of these concerns are specific to India and are
more difficult to overcome than issues such as internet penetration and getting more people to shop online.
Some of the key concerns, as found in the 2015 study – ―Deloitte Global Powers of online retail, 2015‖- are
listed below:
Generation and sustenance of traffic:Competition from established eCommerce players is making it difficult for
private label brands to generate traffic on their white-label websites.
High customer acquisition cost:The customer acquisition costs have been rising due to intense competition by
the relatively better off companies with more funds.
Last-mile delivery:Poor last-mile connectivity, especially in remote areas with larger population, is another
problem faced by Indian eTailers.
High payment cost:CoD services impose substantial financial cost. In India, unlike in developed markets, CoD
continues to be a preferred route of payment.
Low profitability: Profitability is negatively impacted by high customer acquisition costs, free shipping and high
rejection rate of CoD orders.
Regulatory barriers:Regulatory barriers in the Indian eCommerce market are higher as compared to more
mature markets.
The market leader, Flipkart, is also facing a lot of these challenges and to certain extent, has been successful in
dealing with them. The VUCA model is used in the following analysis to examine the issues faced by Flipkart,
and approaches for tiding over these turbulent times are suggested.
4.1 Volatility
Access to capital has led to Indian online retailers looking to buy market share. This has been especially true for
the large players like Flipkart, Snapdeal, Amazon and Jabong. Players have indulged in aggressive pricing
backed by massive advertising spends. Everyone is wanting to be the ‗last-man standing‘ in this cut-throat
246 | P a g ebattle. The private equity (PE) players continue to back their chosen players in this sustenance game with
repeated capital infusions.
Another peculiar volatility in the Indian online retail market is the majority share of Cash-on-Delivery (CoD)
amongst payment options. While CoD has definitely enabled the explosive growth of online retail, it has also
presented multiple challenges like additional cost, longer revenue realization cycle, increased supply chain
complexity, and fraud risk. Current market structure and consumer purchase patterns indicate that CoD is not
likely to go away in a hurry. However, its share is likely to reduce gradually, with increasing penetration of
credit/debit cards coupled with its online usage and greater consumer confidence in such transactions.
Lack of exposure to the online business for its seller base was the reason why the market leaderFlipkart ran out
of stock for many of its popular products at its ‗Big Billion Day‘ festive sale in 2014, leading to much customer
criticism. Hence, the company began preparing six months prior to this year's edition. And, it has seen business
turnover crossing $300 million in gross merchandise volume, thrice bigger than last year, with participation of
around 40,000 sellers. At present, Flipkart‘s total seller base is over 60,000. Starting six months before, it began
identifying sellers and started working closely with them. It identified the efficient sellers and began coaching
them on various aspects which are important for selling products online. The company held training camps on
how to manage peak season demand. This also helped them maximise their sales, with some of them reaching
their annual target in those five days.For this, it took the help of third-party agencies such as Aptech and
Skillventory. It also used data and analytics, to help the sellers identify trends, so that inventory was maintained
efficiently.
Flipkart process a lot of data, gaining insights, which is ultimately transferred to their sellers, who benefited
from it immensely.It also tied up with third parties to provide personnel to the sellers. At a nominal price,
Flipkart provides professional help during peak seasons, like inventory management, advertising their own
products, manpower management and product dispatch.The company employs around 13,000 employees and
plans to add 10,000 to 12,000 more in next one to three years. With adequate preparations, based on the lessons
learned from the events like ―Big Billion Day‖ sale, Flipkart was able to sell 70000 units of Le 1s smart phone
(manufactured by Chinese electronic company LeEco, formerly LeTV) in 2 seconds in a flash sale and followed
up it with selling 95000 units in 20 seconds in February 2016. Thus, it was able to manage a volatile time period
– unexpected and unstable – with timely action by managing inventories and manpower talent.
4.2 Uncertainty
Flipkart didn't have much competition in 2007 when it started. Its founders initially thought of a price
comparison website - an aggregator of e-commerce sites. But they soon realised there were hardly any e-
commerce sites in India. So they founded Flipkart and it quickly pulled away from older e-tailers such as
Indiaplaza by innovating and offering many firsts - 24/7 customer support, cash on delivery, as well as a return
policy. But those innovations are now commoditised. Every big player offers the same. All the three leading
players – Flipkart, Snapdeal and Amazon - also advertise aggressively on television and print to build their
247 | P a g ebrand recall. They are battling to be the first to announce category launches, new services, and funding.
According to industry sources, Amazon India has data scientists whose job is to only execute strategic pricing
that makes Flipkart bleed. Sellers on Amazon may have 2,000 refrigerators, for instance. It may offer deep
discount on 300 of them. That will provoke Flipkart to discount further - and hence add up to its losses.
All three are marketplaces and sellers on their platforms do not necessarily agree to price cuts the companies
want; the trio indulge in 'gap funding'. They make up the difference by paying sellers and charging the cost to
promotional expenses. While companies remain tightlipped, it is widely believed that Flipkart, Snapdeal and
Amazon burn more than $100 million of cash every month. Flipkart has the highest cash burn rate but then it
also raised the largest amount - some $2.3 billion so far. Snapdeal has raised close to $1 billion in 2014, while
Amazon India is backed by a parent which has pledged $2 billion investment in the Indian marketplace. To win
market share, all three offer discount constantly and add to their already huge losses. Flipkart, in 2013-14, ran
losses of Rs. 400 crore, whereas Snapdeal lost Rs 265 crore, and Amazon Rs 321 crore.
Flipkart also established warehouses in Delhi, Bangalore, Mumbai and Kolkata managing a fine balance
between inventory and cost of delivering goods. Facing difficulties from the third party logistics providers
(3PLs) in the form of higher delivery cost, late deliveries and faulty products delivered resulting in return and
customer dissatisfaction, it started its own logistics arm named e-Kart. E-Kart provides a robust back-end
support to Flipkart and ensures timely deliveries. To achieve the economies of scale, recently e-Kart started
providing back-end support to other e-retailers. It has consolidated the market and added strengths by acquiring
We Read, Mime360, Chakpak.com, Letsbuy.com and Myntra along the way. To continue the leadership
position,Flipkart needs to invest more in information – collect, interpret and share it. This works best in
conjunction with structural changes like adding information analysis networks that can reduce the uncertainty.
4.3 Complexity
The Process flow for anetailer like Flipkart is as follows:
Figure 7: Process flow of a typical online retailer
Flipkart's 'Big Billion Days' sale had run into glitches and the ecommerce giant had toapologise to its sellers in
Agra whose products have been removed from the site for almost two days due to delivery issues. Flipkart has
248 | P a g eblocked various vendors‘ products to be sold on its ecommerce site amid a rush of consumers.The listings of
vendor‘s products were not visible on the company's website since the second day of the mega sale event, after
they saw major traction onthe first day of sale. The vendors had got six times more order than what they usually
get, on the first day of the event. One footwear vendor who received around 120 orders on day one said he was
not able to dispatch the whole order even on the third day because Flipkart's logistics partner was only collecting
partial orders, saying they have been asked only to collect certain orders owing to huge demand.This reveals
gaps in Flipkart's logistics as the company had failed to cope with the huge amount of business the Big Billion
Days was generating. The mega sale event ran into problems when the Flipkart website crashed several times
and thousands of customers had complained about products being sold out, even before they could hit the buy
button. There were also complaints of company intentionally increasing the original prices of some products to
make the discount look bigger.
Complexity can be countered with clarity, the deliberative process to make sense of the chaos (Kail, E., 2010).
Leading effectively in a VUCA environment:.Being a marketplace, everything that is ordered by the consumer
has to be supplied by the seller. And Flipkart have limited capacity in terms of how many people they have and
how many collections they can do in a day. To minimize the complexity of this issue, Flipkart could bring in
support systems to extend help to its vendors. Amazon understands similar situations and to help their vendors,
provide financial assistance to its sellers, so that they can carry enough stocks. Similarly, Flipkart could also
offer financial support to its sellers and empower them to handle large orders.
4.4 Ambiguity
Besides the delivery woes related to long distances and certain rules and regulations, ecommerce firms had to
face ambiguity related to the tax rules. As a result, Amazon, Flipkart, and Snapdeal had nearly stopped
delivering products exceeding Rs 5,000 in UP and Uttarakhand. At present, buyers from these states have to file
a VAT declaration for every purchase above Rs. 5,000 from other states. The state tax authorities followed this
rule strictly and hence goods had been seized in many cases. This is the reason for ecommerce biggies stopping
making deliveries.The requirement of the UP government to ask for way bill forms (Form 39) from end-users,
even though the consignments that are brought in are for self-consumption, has lead to recurrent incidences of
seizure for both prepaid and postpaid cash-on-delivery consignments. Since the tax liability on these is already
being discharged by the seller in the state from where the shipment has originated, such tax demands are
considered unfounded by the etailers and restricting marketplace deliveries in those markets.
Ambiguity over types of taxes, rules and regulations that should govern ecommerce entities is the core reason
for such a complicated situation. The battle between Amazon and Karnataka Tax department and ambiguity
related to tax in Kerala are a few examples.Upgraded policies designed especially for the ecommerce industry
will help to resolve this situation. Experts believe that the implementation of GST (Goods & Services Tax) is the
answer to this problem. GST is touted as something that will put an end to the tax woes, eliminate the root
cause, and help the ecommerce sector to grow without further ambiguity.
249 | P a g eA Framework of VUCA Analysis on etailing industry is given below:
Volatility Uncertainity
Flipkart‘s Challenge Flipkart‘s Challenge
- Facing sudden competition from multiple players, - Underestimated competition
dissatisfied customers of ‗Big Billion Day‘ sale
Approach Approach
- Deep discounting of products to kill competition, Long term planning
building infrastructure to handle huge volume of
orders
Complexity Ambiguity
Flipkart‘s Challenge Flipkart‘s Challenge
- Flipkart‘s faulty process to address ‗out of stock - Tax issues in Karnataka and Kerala
issues‘ during ‗Big Billion Day‘
- Failed to organize sellers Approach
- Uneducated suppliers in terms of online business - Specially designed policies for ecommerce
industry, implementation of goods and
Approach service tax
- 5 days exclusive category sales of goods
Example: Fashion, Home appliances, Mobile and
accessories, Electronics and automotives, Books and more
- Educated suppliers in terms of online business
- Provided finance to suppliers for buying inventory
- Built seller‘s trust
Figure 8: Framework of VUCA Analysis on online retailing industry
V. CONCLUSION
The Indian online retail market has had a dream run in recent years when it comes to transaction value, however
significant challenges still remain. These challenges are expected to drive consolidation in the market. The
VUCA model is beneficial in identifying the internal and external conditions that affect organizations today.
The model could be used to understand the areas to be focused, and the characteristics and skills business
leaders need to develop in order to counter the effects of a VUCA environment.
Volatility can be dealt with a better organizational vision, since vision is even more imperative in turbulent
times. Leaders with a clear vision of where they want their organizations to be could help them to tide over
250 | P a g evolatile environmental changes such as economic downfalls or increased competition. They aid in taking
business decisions to counter the turbulence while keeping the organization‘s vision in mind.Uncertainty can be
managed with cognizing, the ability of a leader to stop, look, and listen. To be effective in a VUCA
environment, leaders must learn to look and listen beyond their functional areas to make sense of the volatility
and to lead with proper vision.Complexity can be defied with clarity, the process to try to make sense in the time
of chaos. In a VUCA world, chaos comes rapid and hard. Leaders, who can quickly and clearly comprehend all
of the intricacies associated with the chaos, can make better, more informed business decisions.Finally,
ambiguity can be counteracted with dexterity. Skillful management of the resources in an ambiguous
environment would remove the vagueness surrounding the business.
If provided with the right regulatory enablers and economic conditions playing out favorably, the online market
opportunity could be substantially higher. Retaining a clear vision against which results can be made, with
ability to comprehend the uncertainty, agility to flex appropriately, and skillfulresponse to rapidly unfolding
situations, is the formula for thriving in the Indian online retailindustry.
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