The Story of Flipkart

An article on the Indias largest ecommerce website

From a start-up with an investment of just four lakhs rupees, Flipkart has grown into a
$100 million-revenue online retail giant in just five years. Ushamrita Choudhury tracks
the fairytale.
It came to me as a Christmas gift from my Secret Santa, and it was all about choice,
convenience and a new relationship, is how Naveed Ansari, a 26-year-old Project
Executive from Mumbai, recounts his first experience with Flipkart. A typical
professional from a metro, he's short on time, and he's invariably seeking convenience.
So, an e-voucher from Flipkart seemed an ideal fit. This gift marked his initiation into the
sphere of e-commerce, and the journey for him has just begun.
Many Indians today are embracing e-retailing with enthusiasm. Popular portals such as
Flipkart are spearheading the conversion of offline shoppers into online bargain hunters.
Adds Naveed, as an afterthought, I felt Flipkart was the best option as the transaction
was easy, and the variety of products was a bonus. For Flipkart, this means the
unlocking of a vast audience waiting to experience the joys and comfort of shopping
online. Sachin Bansal, CEO and one of the co-founders of Flipkart (the other being
Binny Bansal), is an ardent believer in the merits of customer service. A simple desire
to create a tailor-made product for the Indian consumer has grown into something
beyond what we imagined, Sachin muses. A quick glance at Flipkart's timeline shows it
was to start as a price comparison platform, but there weren't enough e-commerce sites
to compare. So, both the Bansals, who were colleagues at IIT-Delhi, and then at
Amazon.com, thought, why not start an e-commerce site? That was the genesis of
Flipkart. From an initial investment of $8,000, this humble seed of desire has
germinated into a $100 million e-retailing favourite. The founders' passion for the
consumer Internet space manifests itself in the brand, which is synonymous with
customer service and satisfaction. Don't count your customers before they smile' is the
company's operating mantra, and it's a mantra they're applying successfully alright!

E-commerce: Good to go?

The concept of e-commerce is downloading at a fairly rapid pace in the psyche of the
Indian consumer. In the metros, shortage of time is a big driver for online shopping. On
the other hand, accessibility to a variety of products makes audiences from smaller
towns and cities opt for the online route. Major retailers face challenges in stocking their
stores adequately. Often, customers are unable to purchase items of their choice, thus
prompting them to resort to e-retailers. For books, I usually prefer shopping from
physical stores, but so far, only Flipkart has managed to supply me with Manga,
Japanese literature, that's otherwise difficult to find. Plus, it's often cheaper to buy
online. I'm definitely going to be a regular on their site, enthuses Riddhima Toshniwal, a
content writer from Raipur.
Such experiences explain the growing popularity of Flipkart in the non-metro regions as
well. We will close 2011-2012 with over $100 million in revenue. By 2015, we want to
clock in $1billion, but looking at present trends, we may be able to do it sooner, states
Binny, Flipkart's COO. This statement doesn't seem far-fetched; a quick overview of
India's Internet penetration shows a user base of approximately 100 million. The
Government's National Broadband Plan, pegged at $4.5 billion, proposes to connect
nearly 160 million additional Internet users by 2014. The spread, and subsequent
adoption of e-commerce, thus, only seems logical. With several reputed brick-andmortar retailers also offering online services, it seems natural the trend of shopping
remotely will scale up substantially. The value proposition in either formats of retailing,
physical and online, is different. It's the experience of touch-and-feel that makes
physical shopping exciting. In the online context, convenience and comfort takes over.
There's ample scope for both to grow, Sachin avers.
The Devil lies in the detail
A robust back-end is a vital pre-requisite for an online business to survive, since once
the customer completes her transaction, it's this back-end that connects the dots.
Flipkart began operations on the consignment model goods were procured from
suppliers on demand, based on the orders received through the website. However,

eventually, the books-to-electronics e-shop adopted the warehouse model. The

company has its own warehouses, and maintains its own inventory. Sales projection
determines the inventory, and the available inventory accounts for the sales made; it's a
self-feeding cycle of sorts. Nearly 60 to 70 per cent of deliveries take place through our
own network, states Sachin, who thinks such a model provides for better control over
the entire logistics management piece.
On the operational front, issues faced by the company pertain to delay in deliveries, or
faulty products. As a customer-centric organisation, none of these issues can remain
unresolved for long. We face significant challenges in reverse logistics. It's a big task to
track unsuccessful orders, which are quite costly to manage, he continues. Hence,
Flipkart stresses on customer service it aligns with the firm's philosophy of making
better our service promise'. Binny pitches in saying, Bigger investments in our supply
chain and technology will enable larger warehouses and increased process automation.
Our bigger objective is to redefine the way India shops.
Consistent customer service is the hallmark of Flipkart. The founders don't think
discounts can replace the customer's satisfaction of being serviced promptly and
efficiently. Similarly, the trust-building exercise is accorded a lot of importance. Flipkart
connects with customers in real-time, through Facebook and Twitter. Yes, honesty is
the best policy for this e-commerce trailblazer. We've trained our customer service
executives to take spot decisions. Addressing customer concerns and owning up to our
mistakes reassure customers we have their best interests at heart. In our business,
delivery drives delight, Sachin articulates.
Kart'apulting into the future
Positive word-of-mouth gives Flipkart an edge on the customer side of the business.
Backstage, the story's no different. Their recent acquisition of Letsbuy.com will result in
a faster expansion rate. Binny's long-term outlook includes scaling up the firm's selfdelivery network, and alliancing with like-minded businesses. We are open to
partnerships that'll help us attain our goals, he signs off. Both the founders are happy to

see increased venture capital participation in the e-commerce space, which, according
to Sachin, still needs lots of investment to bolster its back-end.
Like a typical entrepreneur, he opines innovation is the key to the company's success.
Extending services like cash-on-delivery and credit card payment at doorstep were
introduced to provide ample choice and comfort to customers. Now, the attempt is to
widen Flipkart's reach in the digital domain through Flyte, the portal's recently launched
paid music download service. Customers can buy music in MP3 format from over 700
genres, and 55 languages. The files, which are digital rights management (DRM) free,
can be played without any restrictions on any type of device and for an unlimited
number of times.
Innovation is just one aspect of the business universe. Today, the premise of any
business, traditional or modern, rests on its ability to harness data, which prompts the
question, how does Flipkart utilise its data to generate consumer insights? Since the
industry is still in infancy, there is no history one can to refer to. Gathering and analysing
data, hence, becomes crucial for planning the business's future course of action. This
practice, in a way, adds to the surprise and delight' factor for customers, because
they're then treated to offers that are most suited and relevant to their preferences.
Sachin reiterates, All our efforts are invested in matching customers' expectations, and
we'll do our best to bring e-commerce into the forefront.
In this industry, the scope for growth is immense, as is the risk of failure. Consulting firm
Technopak Advisors estimates India's digital economy at $600 million currently, with the
potential to balloon to $70 billion by 2020. K. Vaitheeswaran, e-commerce veteran, and
Founder and CEO, Indiaplaza.com, one of India's earliest, compares the vertical to a
hard-fought marathon. It's not like a 100-metre dash. Globally, we operate on the
lowest margins, but we're still seeing real growth. There's still no formula for 100 per
cent success. Flipkart is running the marathon with ample support from private equity
players such as Accel Partners and Tiger Global, which have collectively invested $150
million in the entity so far. Although profits after tax remain negative, the company's
valuation is soaring thanks to eager participation of these private equity players. The

acquisition of Letsbuy.com signals FlipKart's ambitions to capture the domestic online

market. A burgeoning consumer class, coupled with a rising web-literate population and
zealous venture capital funding may just propel Flipkart to become India's answer to
Amazon.com!
Uncovering India's online avatar is a fascinating process. Only those companies that
can successfully engage customers through novel ideas, quality products and seamless
services will flourish. May be it is sheer genius, or simple common sense the e-retail
hero has been able to accomplish all this during its formative years. Summing up the
Flipkart experience, Abhishek Asthana, a marketing student from Pune, has dedicated
an ode to the portal. He tweaks the famous MasterCard campaign to sound something
like There are some things you can't buy online For everything else, there's Flipkart!