Flipkart: The Amazon of India

Within just 4 years of operation Flipkart has turned the Indian e-commerce industry on its head. What started off as an online book store today sells a wide range of things from cell phones to pensand consumer electronics. Founders Sachin Bansal ans Binny Bansal (no they are not related to each other) strated Flipkart with an investment of just Rs. 5 lakhs in October 2007. Today they target to become India’s first million dollar e-commerce company with revenue of Rs. 4,500 by 2015. The company boasts of selling 20 products every minute. This Bangalore based company is called by many the ‘Amazon’ of India; in fact both founders were ex-Amazon employees. That experience sure seems to have helped them a lot. Let’s have a look at the journey of this amazing company. 

It has not been an easy journey but their rise has been quick. Flipkart’s revenue in 2008-09 was only 4 crores, 2009-10 was about 20 crores and in 2010-11 they made approximately 75 crores. They expect to make around 500 crores in this fiscal. Their growth is phenomenal if you look at the Indian e-commerce market before Flipkart came. Indian’s never took to the concept of e-commerce. Our customers would rather like to look and feel the product before buying it. This severely limited the growth of e-commerce industry. Flipkart had to break through this e-commerce inertia to become a success. When Flipkart arrived its owners started out with books, in fact for the first two years Flipkart only sold books. Books are easy to procure, their customer base is large and they are easier to ship. Additionally they come comparatively cheaper hence the customer is not afraid to try the out the site’s service. Today it is the largest book seller in the country stocking close to 11.5 million titles.

The procurement model is at the heart of Flipkart’s success, as most delays or troubles occur in this part of business. Flipkart employed consignment model i.e. procurement based on demand. Initially they had tie up with two distributors in Bangalore. Whenever a customer ordered a book, Flipkart would purchase it from the distributor, pack it in their office and courier it. The owners contact numbers served as the customer service in starting days. When they received investments they built warehouses. The first warehouse came up in Bangalore. Later it opened warehouses in Delhi, Mumbai and Kolkata too. Today 80% of deliveries take place through its warehouses. This makes the system fast and efficient. It is the robust logistics at Flipkart that sets it apart from other wannabe e-commerce sites.

Flipkart’s success mantra:

1.      Great customer service

Flipkart users are more satisfied than that of their competitors. Great customer service has been its hallmark.

2.      Easy to use website, hassle free payment system

The user interface is sleek and easy to use.

3.     Cash on delivery/Card on delivery mode of payment

This has been a major instrument in Flipkart’s success. Almost 60% of its sales happen through this mode. Cash on delivery created trust in the minds of Indian customers who were always weary of making payments online.

Threats to its crown

The biggest threat to Flipkart is surely their founders’ previous company, Amazon. The American giant is keen on entering the Indian market. In the burgeoning middle class of India it sees a huge potential. Well that potential has already been highlighted by Flipkart and Amazon surely feels that it is entering the market late. Given its size, scale and technology Amazon is a formidable player to compete with. But beating Flipkart in its own backyard will be tough. Flipkart has a service totally customized for the Indian consumer. Its supply chain – logistics very robust.  Its experience of the Indian market will come very handy when competing with Amazon.

Analysts, however, believe that the Indian e-commerce market is big enough to accommodate these players. So maybe they can grow and flourish together. Well, till Amazon steps on the battlefield, our own Flipkart will surely be the king of Indian e-commerce.

Future for Flipkart

FLipkart which began with selling books now has around 12 product categories. Going ahead electronics will gain a major share of tits business. It has also started selling music CD’s and DVD’s of bollywood releases. Soon it will also start selling digital content like songs and movies as this will be a very hot segment in near future. Flipkart wants to add every category of e-commerce to its portfolio.

It was in the news recently as a private equity player might invest $150 million in the company valuing it at $1 Billion. As of now they don’t have any plans of coming out with an IPO

In a country of 1.2 billion people and just 10% internet penetration, the market for e-commerce is still growing and it has huge potential. With the advent of international players like Amazon e-commerce will get a push. Indian companies too are making merry while the sun shines. There are a large number of discount sites like snapdeal.com, mydala.com etc., apparel stores like fashionandyou.com and even a baby product company babyoye.com. All these companies are doing well at the moment. The fortunes of these e-commerce companies will keep goin upwards as more and more Indians warm up to the idea of online shopping. Some say this is just a bubble, I personally feel that e-commerce still has a long way to go. E-commerce is a growing industry and this decade will see a phenomenal rise in e-commerce in India.

Some facts about Flipkart:

Ranked in top 30 websites in India

11.5 million Book titles

8 million site visits every month

4500 strong team

30,000+ items shipped daily