Flipkart brings online shopping wave to Indian market

Bloomberg

India isn’t an easy place to build an e-commerce company. The vast, multilingual nation suffers from creaky infrastructure, a sometimes myopic bureaucracy and an ingrained distrust of the merchant class. Yet homegrown Flipkart Ltd. has managed the impossible with a blend of Silicon Valley smarts — its founders worked for Amazon.com Inc.; key hires were lured from the Bay Area — and a canny understanding of local verities. Because few Indians use credit cards, Flipkart offered cash on delivery.
In Mumbai, it deployed dabbawallas, the famed lunch delivery corps, to get packages to customers.
Since its founding around eight years ago, Flipkart has become the nation’s most valuable startup and introduced online shopping to the Indian masses. Still, no one is celebrating at the company’s headquarters in suburban Bangalore. More like preparing for war. After years of scorching growth, Flipkart sales have plateaued.
An attempt to go mobile-only backfired. Key executives have quit. Earlier this year a Morgan Stanley fund marked down Flipkart’s value from $15 billion to $11 billion. And those may be the least of Flipkart’s challenges. Amazon, already closing the gap with Flipkart in India, is now mobilizing for an all-out assault one of the world’s fastest-growing internet markets. Last month, Amazon Chief Executive Officer Jeff Bezos pledged to invest another $3 billion in his company’s Indian operations, bringing the total to $5 billion.
If any of this fazes Flipkart CEO Binny Bansal, 33, he isn’t letting on. During a rare interview, in the ‘Steve Jobs’ conference room, complete with a large color photo of the late Apple founder, Bansal was uncharacteristically blunt.
Flipkart, he said, has battled competition since its 2007 founding: “First it was local, now it is global. Competition catches up and then gets left behind. We have seen that in the past and we’ll see it again.” He pledged to double revenues and become profitable in the next 24 months. As for Bezos’s $3 billion. “Does saying make it a fact?” Bansal asked.
The fact that Bansal is CEO at all speaks volumes about the challenges ahead. He took the job about six months ago when co-founder Sachin Bansal (34, no relation) stepped aside to become chairman and focus on long-term strategy and investment opportunities.
The younger Bansal is seen as an operations guy with the common touch, someone who can get the company running at maximum efficiency.
Since taking the helm, he has introduced 7 a.m. deliveries that he says reach customers in Mumbai and 43 other cities reliably, with plans to extend the service to other cities.
To reduce the number of returned smartphones, Flipkart’s biggest category, he has dispatched technicians to fix minor glitches before customers have a chance to complain about them. An investment in new fulfillment robots will hopefully boost efficiency in a sometimes chaotic supply chain. And to get Indians to forswear cash—a hopelessly inefficient payment system for a modern e-commerce company—he acquired an Indian startup that makes it simple to pay via smartphone.
Bansal is the best man for the job, says Subrata Mitra, who sits on the board and leads the India office of Accel Partners, Flipkart’s third-largest investor. “The changes are starting to yield results,” he says. “Flipkart will be back in aggressive growth mode soon.”