Founded: 5th September, 2007
Founder: Binny Bansal, Sachin Bansal
CEO: Binny Bansal
The Service India That Gripped The Nation…
Shopping — a stress buster for some and on the contrary a stress generating tool for others. But, why does such a vast difference exist when it is an essential part of our lives? This question must have struck someone and the answer to it was online shopping. Hats off to the one who came up with the idea of e-commerce, as it brings in the best of shopping sans the pangs of going through the conventional routine. We do not need to walk through the aisle of a departmental store to look out for the things we need, there is no waiting in the queue to pay the bill nor does it come with the worry of transportation. As they say, ‘it’s just a click away’. With the advent of e-retailing portals, we can now have anything we desire, delivered at our doorsteps within a few days. And, for those who, like me, hate to wait, nowadays, we also have the ‘one day delivery’ option. Ergo, let’s go shopping!
The story began not in some rural land where civilization had just set foot but in an urban setting which was developed- in terms of technology. There, two creative souls thought of getting started with their own enterprise and started working around this idea until the day their dream materialized into a reality. They worked tooth and nail till they saw their baby project reach heights and become synonymous to ‘online shopping’ in India. Yes, we are talking about ‘Flipkart’.
Their Vision And Where The Company Is Headquartered!!
Sachin Bansal and Binny Bansal are the minds behind this huge market revolution in India. They hail from Chandigarh, but contrary to what most people assume, they are not brothers. Both are alumni of IIT, Delhi, and after working for some years, they decided to build up their own empire. Thus, on 5th September, 2007, the world saw their vision come true in the form of Flipkart. Now, the company has offices in some of the major cities of the country but headquartered in Bangalore, Karnataka, and registered in Singapore.
Flipkart ushered in with the concept of making shopping hassle free for the people who do not like to invest too much time in it. Today we find anything and everything we can think of on Flipkart, but how many of us do know that their first product was books, and their first customer was from Hyderabad. After the success of books they expanded their perimeter, including household items, gadgets and the list goes on and on. They have been driven by the unrelenting faith their customers rest on them and the satisfaction people gain from their services.
The co-founders wanted a name which would be apt for their venture at the time it was launched as well as suit the bill when the business evolved. They began with books so flip can mean flipping through the pages and kart is the first thing we pick when going shopping. However, this also meant flipping through the vast assortment of goods which the portal now provides and in their words it is “Flipping things into your Kart”.
The Founders And Their Net Worth:
The Bansals conceived an idea and with time it became a billion dollar baby and with its growth and development, Sachin Bansal, Executive Chairman and Binny Bansal, CEO too attained a billionaire status. With a net worth of $1.3 billion each, the co-founders of Flipkart ranked 86th on the Forbes list of country’s 100 rich, in September 2015 and the company’s net worth is estimated to be $15.5 billion according to Forbes.
Both the co-founders had been employed at Amazon before they switched to their own venture. Amazon India is based on the Marketplace model which is generally followed by the big players of the industry of online retailing. However, initially, Flipkart did not follow that and went for the conventional business structure which is the Inventory model.
The Business Model That Brought Them Success:
With the passage of time they gained enough experience from their own mistakes and customers’ feedback, which made them remodel their business into the hybrid structure which involves both Marketplace and Inventory. Their prime focus was customer satisfaction and they understood that in order to make the process smooth, they had to have their own inventory and warehouse.
From then on, they worked to make their back-end service stronger which makes the entire process from placing an order to delivery of goods better. As quoted by Sachin Bansal, “Nearly 60 to 70 per cent of deliveries take place through our own network”.
Being an online shopping portal in India was not easy and taking this plunge was a big fat risk. However, the Flipkart team came up with innovative ideas to erase these obstacles and changing the model was one of those solutions.
Challenges & Threats:
In a country where people derive the real pleasure of shopping by scrutinizing all the tangible aspects of the goods and where bargaining is considered a skill, selling products by just displaying photos called for a real challenge. To eliminate this hindrance, keeping intact the trust people bestowed on them, they brought in the concept of ‘cash on delivery’. For the ones who believe in plastic money and not carry cash with them, Flipkart also has the payment through card at the time of delivery option. Following their footsteps, many shopping websites have incorporated these in their business.
When you are new in the business you are faced with unknown threats and you do not have a rule book to find solutions to those. Flipkart too, being the first Indian e-commerce agency was faced with innumerable such threats and each time they came up with a groundbreaking idea. But this did not always guarantee profits and it was a threat in itself. However, they did not go by procuring profits rather to gain a loyal set of customers was their first and foremost concern. Therefore, they did not mind being in loses for a short time as they knew this was only a sign of long-term profits and increasing longevity of the business.
There was a time when they had tied up with various courier services but later, realized that when the products did not get delivered as promised, it was their name which was hampered. Hence, they came up with their own logistics called the eKart. Now, they have their own inventory, warehouse and logistics too, which means their business is well under their control. In this way, studying the Indian market and penetrating into the minds of the buyers, they are evolving and cementing their foothold in the electronic market.
Who Invested In FlipKart?
When the company was taking its first steps, the equity firm Accel Partners provided it with a $1 million fund and then Tiger Global Management and Naspers Group too funded the venture. Eventually, they gained the faith of investors with their evolving business and rising statistics which helped them gain more and more funds.
Investing firms such as Morgan Stanley Wealth Management, Vulcan Inc. Sofina SA DST Global and Dragoneer Investment Group too contributed huge amounts to the business.
Every year the flow of funds kept increasing and in 2015 they had raised funds worth $700 million and by then this big daddy in the business raised around $3 billion altogether.
Secret To Success?
Putting their customer first is the mantra which made this small idea grow into the biggest online shopping website of the country within years of its inception. Whenever they implemented a change or whatever changes they reverted were all based on the convenience of their customers. Be it the introduction of cash on delivery or shifting back to the mobile web from app only platform.
Acquisitions & Merges:
Since 2010, this e-tailer has acquired and merged with several firms including online book locator WeRead, media platforms such as Mime360 and Chakpak.com. They also expanded their business in electronics by acquiring Letsbuy.com. But one of the major acquisitions of Flipkart till date has been the online fashion store Myntra. This fashion e-tailer already had a huge fan base and by getting it under their belt, they have taken a big leap towards becoming one of the biggest business moguls of recent times.
Flipkart joined hands with the big telecom brand Airtel, pledging to provide free access to Airtel customers. But this deal created a lot of criticism among the people who believed this was against Internet Neutrality, which finally made them nullify the deal.
Controversies That Plagued Their Road To Success:
The much awaited Big Billion Day too did not turn out to be in favour of Flipkart, although the reason behind this was to increase its followers. The enterprise announced the Big Billion Day on which goods would be sold at extremely cheaper rates, calling for a billion sale in just one day. However, this did not come out as expected with the server facing technical issues as it was overloaded with users. Moreover, some who could place the order received mails saying the order got cancelled. Along with the frustration of customers, the competitors too were having similar feelings as selling goods at less than cost price marred their business, and went against the trade laws in India. This controversy even led the government to remark that new law will be designed for e-tailing.
In spite of these controversies and adversities, this one stop shop has stolen our hearts and so much so that when we type ‘f’ in the Google search bar, for most of us the auto result shows www.flipkart.com.
“Ab Har Wish Hogi Poori”
“Our bigger objective is to redefine the way India shops.”
Sachin Bansal: When Flipkart Was A Startup
Keynote by Sachin Bansal (Slash n 2014)
Walk The Talk with the founders of Flipkart
Flipkart CEO, Sachin Bansal UnPluggd @ UnPluggd 7
“We reinvented the wheel of e-commerce in India” – Sachin Bansal, Flipkart