Beyond the apology: 5 things Flipkart needs to do to retain customers

As I write this piece, news has just come in that after receiving “many complaints” from traders on Flipkart’s massive discount sale, the government has said that it will look into the concerns and take a call on whether more clarity is required on e-commerce retail business.

Commerce Minister Nirmala Sitharaman has promised to look into the issue while the Confederation of All India Traders has also sought a probe into the business model and trade practices of e-commerce companies to find out how they are offering huge discounts during the ongoing festive season.

But there is some good news. Flipkart crashed because of unprecedented demand and this was realistically the first time any Indian e-commerce player tried to create such demand in a single day and they were successful at it.

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In the eyes of its buyers, Flipkart was unable to cope high incoming traffic volume on Big Billion Day, leading to outages and sudden cancellation of purchases. This is bad news, because the e-commerce industry is already plagued by trust issues and cash on delivery lowering margins for all involved.

Here are five things that Flipkart needs to do immediately as a follow up to its honest apology.

Working closely with its supply chain Flipkart will need to invest heavily in demand forecasting tools to ensure that they are able to inform their sellers of possible spikes
in demand. Supply chain efficiency starts with information and more informed the sellers are, the better they will be able to fulfil the demand. Flipkart needs to work closely with their vendors, so that not only are there sellers ready with inventory but are also equipped to fulfil the orders in an expedited manner.

Guaranteed Price Ceilings Flipkart will need to spend great deal of time and money on convincing its current and future customers that the discounts are genuine and that what happened during the sale was simply an exception and not the rule. This may be easier said than done but Flipkart may need to invest in programs that guarantee price ceilings. These price ceilings would provide assurance to customers about the maximum advertised price across the lifetime of the product.

Relook core software algorithms The site crashed because the software and hardware infrastructure was not able to scale to the sudden spike. Flipkart needs to quickly invest in scalable infrastructure where a sudden spike such as this would not cause there sites to be unresponsive or show errors. In some cases, they may need to invest in building completely new technological infrastructure to ensure scalability not for today’s demand but also for future growth. Flipkart will need to remember that at times technology scaling is not dependent on the number of servers but at the core of their software algorithms handling the increased number of resource demand.

Work for the present, plan for the future The e-commerce industry has been growing at a tremendous pace and the online companies do not get a chance to stop everything and retool
peacefully. They have to build the future infrastructure while fulfilling current demands of the growing market.

Work on actualizing the apology The issues faced by the customers have left a very bitter taste and hurt the Flipkart brand equity. The apology conveyed to the market that they were not defending but had accepted the issues and were willing to deal with them. Though customers faced issues, the apology added a very personal twist in an industry that often lacks personal interaction with customers.

Without the apology, the customer trust gap in online retail would have increased but I think the apology actually shortened the trust gap for the industry overall. The issues highlighted during the sale on Flipkart may have temporarily damaged its brand equity but helped the industry get a crash course on what may happen if the demand suddenly spikes. Flipkart should look to emerge from this even a stronger brand if they are able to quickly resolve the issues and ensure that these
issues do not occur again in the near future.

Ashish Jhalani is the founder of ecommerce advisory eTailing India and Indian School of eBusiness.