Ecommerce CEOs to retain customers

Lessons to learn from Flipkart

Among all other online marketplaces in India, Flipkart is undoubtedly the most popular one. They started way back in 2007 and have made a mark for themselves since then. They have a customer recall created through frequent advertising. They have had a journey of adding new categories with time as and when they expand.

Let us have a look at the Timeline of Flipkart:

September, 2007 Launch of Flipkart: Flipkart was launched with an initial investment of INR 4 Lakhs by Sachin Bansal and Binny Bansal, an IIT duo. It was supported in early days by their respective parents who used to give an INR 10,000 as a monthly allowance. This continued for 18 months.                
October, 2008 Incorporation of Flipkart online Services Pvt. Ltd: Formally incorporated as a company, it started as an online books retailer. The site was launched from their two-bedroom apartment in Koramangala, a primarily residential locality in Bangalore. First order was placed 10 days after the launch, from Andhra Pradesh for the book ‘Leaving Microsoft to Change the World’ by John Wood.
November, 2009 Accel Partners (India) invest $1million in Flipkart: The first investment of USD 1 million came in from Accel India at a valuation of INR 16 crore (USD 2.61 million). The venture capital (VC) company, whose India operations are headed by SubrataMitra, has been funding internet, software and technology related companies for the past few years.
March, 2010 Revenues near $2million in 2009-2010: In the financial year 2009-10, Flipkart recorded a revenue of INR 11.6 crore (USD 1.89 million) along with a loss of INR 91.27 Lakh (USD 0.14 million). It was a high jump from the previous INR 2.5 crore revenue and a loss of INR 1.37 Lakh in 2008-09.
June, 2010 Tiger Global invests $10 millions: The company raised USD 10 million from Tiger Global in the second round of funding and at an evaluation of INR 220 crore (USD 35.93 million). Tiger Global’s private equity partnerships have ten-year horizons and invest in growth companies in the global Internet and technology sectors. The funding was used by Flipkart for building more capacity in supply chain and logistics, upgrading technology capabilities and expanding marketing initiatives.
December, 2010 acquires book recommendation network we Read: Acquired weRead- a social network based book recommendation and review portal. We Read was set up in 2007 by Ugenie, a start-up based out of Bangalore.
February, 2011 Adds camera and computers in electronic category: Flipkart’s category expansion continues with the addition of electronics such as cameras and computers.
March, 2011 Announces target of $1 Billion GMV by year 2015: Flipkart projected target of reaching to USD 1 billion (about INR 5,500 crore) in sales by 2015
March, 2011 Analyst revise FY13 expectation by 6x: Expected to record a revenue of USD 16.6 million for FY 2011-12 and planned to hit USD 100 million by FY 2012-13, a six-fold jump from the existing year’s sales
March, 2011 revenues grow 5X to over $8million: In the financial year 2010-11, Flipkart had revenue of INR 50 crore (USD 8.186 million).
April, 2011 Launches First TV commercial: First TV commercial- a fairytale featuring an old grandmother who is able to magically order books with her pet mouse.
June, 2011 Tiger Global invest $20 million: The Company raised USD 20 million from Tiger Global in Series C round of funding. The investment aimed at building the consumer base of the company.
August, 2011 Adds Home Appliance as a category
October, 2011 Adds TV and Video as category: This includes CDs/DVDs of movies and Hindi/English TV Shows.
October, 2011 Acquires music streaming portal Mime360:Flipkart made its second acquisition in form of Mime360, a Mumbai based business digital content platform company which hosted music streaming for labels like Saregama, Universal Music and Inreco. Amount was undisclosed.
October,2011 Caryle, General Atlantic in talks to invest in flipkart: Founder duo travelled to New York in order to convince General Atlantic Partners’ investment committee to invest USD 150-200 million into Flipkart at an overall valuation of somewhere between $750 million to $1 billion. However, General Atlantic refused to participate in Flipkart’s funding due to issues in its presented valuation.
November, 2011 Adds Stationary and Kitchen appliance as a category
November, 2011 Acquires Bollywood news site Chakpak in distress: Chakpak was third in Flipkart’s acquisition series. It was a Bollywood news site that offers updates, news, photos and videos. Before acquisition, Chakpak has raised an amount of USD 5 million from Canaan Partners. However, they soon run out of money and were acquired by Flipkart for US$ 2 billion
November, 2011 Launches prepaid wallet: Launches prepaid Wallet feature that lets users shop up to Rs. 10,000. Also, it allows shoppers to store money on the site and use it to purchase items, without having to reach for their credit card for each transaction.
January, 2012 Raises $150 million in series D: Raised $150 million from MIH and ICONIQ Capital along with existing investors, Tiger Global and Accel Partners at a valuation of USD 850 million (INR 4675 crore). The funding aimed at fueling their growth plans and help achieve the stated ambition of hitting $1 billion in gross merchandise value by 2015.
February, 2012: Acquires Online electronic store lets buy: Flipkart made its next move in its acquisition spree-acquired Letsbuy.com, the country’s second-largest online electronics retailer for speculated USD 20 million. The deal, however, cached a lot of controversies.
February, 2012Launches digital music store flyte: Flipkart made its entry into the digital world with the launch of Flyte Digital Music Store. The move was said to the next logical step after acquisition of Mime360.
March, 2012 Losses touch $18 million: Flipkart recorded a loss of INR 109.9 crore (USD 17.98 million) and revenue of INR 204.8 crore (USD 33.51 million). The expenses for the year reach to INR 265.6 crore (USD 43.46 million) with cash balance dropped to INR 236 crore (USD 38.61 million).
April, 2012Adds Fragrances as a category: Two categories viz. Perfumes and Deodorants were added both for men and women.
August, 2012 Adds baby care as a category
October, 2012 Adds menswear as a category: Realizing the potential of growing online apparel segment, Flipkart marked its entry by launching men’s apparel category on the store. In the same month, it also launched sports and fitness and footwear as a category.
November, 2012 Adds e-book as a category: Flipkart Forayed into the eBooks category through its digital store Flyte. The Flyte store had an initial collection of over 1 lakh books starting from as little as INR30. Readers can purchase and download the books from the e-showroom using their mobile devices.
November, 2012 Government Raids Flipkart warehouses: Enforcement Directorate (ED) raided Flipkart warehouse in Bangalore on probing alleged violation of Foreign Direct Investment (FDI) regulation. Important documents and computer hard drives were confiscated to be submitted to the cyber forensic department for further investigation.
February, 2013 Adds women’s wear as a category
February, 2013 Sells WS retail: WS retail was the B2C division of Flipkart. However, Flipkart sold WS Retail to a group of investors led by former On Mobile COO Rajiv Kuchhal. The step was taken in order to help Flipkart to comply with the foreign direct investment (FDI) regulations.
March, 2013 Revenues crosses $200 million in 2013-14:In 2012-13, Flipkart reported a revenue of INR 1180 crore (USD 193.09 million) and a loss of INR 281.7 crore (USD 46.09 million). The expenses of the company reached to INR 1366 crore (USD 223.53 million) with cash balance dropped to INR 166.2 crores.
April, 2013 Launches Seller market place: Launches its seller marketplace with an aim to place a virtual mall giving shoppers access to multiple brands and sellers under one roof. Initially, the marketplace got 50 sellers on board.
May, 2013 Shuts down flyte: Realizing the music downloads business in India will not reach scale unless several problem areas such as music piracy and easy micro-payments etc are solved in great depth, Flipkart stepped back and shuts down the service.
July, 2013 Launches Payment Gateway service Payzippy: Founders, who earlier went on to mess around with inventory model retailing as business have now finally found their cup of cake in technology by first moving to the marketplace model, and now launching a payment gateway service, initially only opened for Indian merchants.
July, 2013 raises $360 millions: In series E-Raised USD 200 million from existing investors Tiger Global and Accel Partners. Soon, controversies prevailed on its valuation and facts submitted. 3 months after, it again raised USD 160 million from Tiger Global, Dragoneer, Morgan Stanley, Sofina and Vulcan Capital making the total raise to USD 360 million.
August, 2013 Launches Flyte book app: Introduces Books App for iOS, Windows Phone and browser. Flipkart books use a propriety format and cannot be read in any other format.
August, 2013 India wants to know campaign: In order to educate the consumers about the benefits, ease and convenience that ecommerce as well as Flipkart offers, it spoofs Arnab Go swami’s, ‘India Wants to know’ in new TVC.
September, 2013 Launches Flipkart Android app: Introduces Android Application that offers users the ability to browse and purchase from the online shopping website’s product catalogue from their smart phones.
October, 2013 Adds Mobile as a Category
November, 2013 Flipchart valued at $ 1.6 million: After its latest round of funding, the firm was valued at approx. INR 9900 crore (US$1.6 billion) by MIH India. MIH India, a part of South African media company Naspers group, said that it bought an additional 8.6% stake in Flipkart Pvt. Ltd in July for Rs.851.7 crore.
November,2013launches iOS app
December, 2013 Launches one day delivery: Launched ‘One Day Delivery’ for INR 90 in selected cities. This includes Delhi, Noida, Mumbai, Chennai, Bangalore, Pune and Hyderabad. Orders need to be placed before 6pm on the previous day.
December, 2013 Launches consumer wallet Payzippy: consumer Wallet was launched in partnership with several ecommerce stores. The service allows users to store their card information just once and use it on Flipkart and other partnered website.
December, 2013 Analysts project $485 million revenues in 2013-14: Analysts expected Flipkart to generate sales revenue of INR 3, 000 crore (USD 485 million) in FY 2013-14.
March, 2013 Reaches $1 billion GMV run rate: Company touches the annual GMV run rate of USD 1 billion at a valuation of INR 2000 crore. The founders are now expecting Flipkart to become a mobile commerce platform in the near future with features customized to individual users.

What can we learn from Flipkart?

Sachin and Binny Bansal started off with books- a low capital investment and fast turn-around time. The best thing they did was that they understood that to be successful in India, they need to be the God of distribution. In India, it is the amazing logistics that prove to be the game –changer and that’s exactly what the folks at Flipkart have done.

Operational Strategy:

Flipkart’s business model is much deeper and much expansive.

Following are the few key points –

  • Rationalized supply chain – Inbound logistics
  • Strategic warehousing and distribution capability – Operations
  • Well aligned fulfillment process – Outbound logistics

All the three processes are extremely well integrated – first by a sound strategy, around which the organizational structure is built.

They have a complementing structure to support their strategy. The third critical success factor for Flipkart is technology as an enabler. A strong information system is at the core of the organization, which drives visibility and end-to-end integration across their supply chain processes (inbound operations – outbound) resulting in a well lubricated efficient machine.

Flipkart first: They have started this as a subscription model in order to engage the customer for long term. Following are the benefits that they cover under this:

  • It offers customers unlimited access to In-a-Day guarantee delivery
  • Free standard delivery with no minimum purchase price
  • Same-day Guarantee delivery at a discounted price and a bonus of 60 day replacement guarantee, instead of usual 30 day period.

Marketing Strategies:

  • Word of mouth (initial marketing, even now they want to satisfy customer so they come back for more)
  • Good use of SEO
  • Flipkart says “We DO NOT sell old books or used books. All the books listed at Flipkart.com are new books. The books listed at Flipkart.com are now available for free download in e book or PDF format”
  • Good use of SEM

Thus, it is safe to say that Flipkart and its journey is a good case study for the new entrants who wish to join the Ecommerce bandwagon. If you want to know more such facts,