Read the success story of Flipkart here: In 2006, Sachin and Binny Bansal, two IIT-Delhi graduates (2005 Batch), were busy building the notable Amazon S3, an online backup service, which has powered more than half of the start-ups in the United States since its
launch, for the Amazon.com, the American electronic commerce giant. It was moreover destiny than a mere coincidence that both shared the same surname, belonged to the same city (Chandigarh), went to the same school, graduated from the same college and last but not the least, shared the same dream of building a sustained Indian e-commerce firm, which would later shine as Flipkart. Their inexorable dream, baked in the juices of the fervent passion and the burning desire to succeed, led to the incredulous faith in their endeavor.
Flipkart was founded in 2007, with the initial self-funded capital of 400,000 INR.
The firm mainly focused on the selling of books in its startup days. The idea of selling books was rather a modish concept, when compared to the other contemporary online shopping sites. But no one knew selling books will write the success story of Flipkart one day. When asked by a leading magazine about their bet on the books, which were less profitable than the other products sold online, Binny Bansal, the then COO of the firm said- “Books are a good category in terms of logistical issues that are present in other items. It involves low transaction and so buying books is not risky for a customer.” But the promise of quality service and on-time delivery, leading to immense customer satisfaction helped them in emerging as the market leader in the business.
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The journey was not a piece of cake for the duo, as when asked by a leading magazine about the difficulties faced by them during the incubation period of their brainchild, they commented – “Being out of college for just two years, It was difficult to find a vendor to invest in the company, as we had no prior experience and no sense of business. We didn’t draw our salaries (from the business) for almost a year and a half.” It was the messianic zeal of the duo that led to the reported sales of INR 40 Million in FY 2008-2009, eventually leading Flipkart to raise the funding of US$1 Million from the venture capital funds Accel India in the year 2009. This gave a new dimension to their business, resulting in the reported sales of INR 220 Million in FY 2009-2010 and of INR 750 Million in FY 2010-2011. Tiger Global, a leading venture capital funds of India, funded the venture by US$ 10 Million in the year 2010 and US$ 20 Million in the year 2011. The major acquisitions for the firm are: WeRead, a social book discovery tool, in the year 2010; Mime360, a digital content platform company, in the year 2011; Chakpak.com, a Bollywood news site, in the year 2011; Letsbuy.com, a major Indian e-retailer in electronics, in the year 2012.
There were some setbacks too to the success story of flipkart, which were faced by the duo in the course of the establishment of a firm generating revenue of INR 500 crore (for the Financial Year 2011-2012). As reported by Forbes India in the article “Can Flipkart Deliver?”, dated July 6-2012, Sachin and Binny Bansal’s agenda of convincing the investment committee of General Atlantic Partner, the world’s 12th largest private equity firm, to invest a considerable amount of $200 million into the Flipkart, which was valuated as $1 billion enterprise by the duo, went in vain. The investment firm figured that the sales reported by Flipkart would not be able to cope up with the pace at which it is building Infrastructure. With the introduction of cash on delivery (CoD) and the provision for returning the products, the firm managed to bring the customers to their doors, but somehow these policies proved to be fatal for the same. To cope up with the various persisting hindrance faced by the e-commerce sector of India, Flipkart developed their Infrastructure based on the policy adapted in China to tackle the same, by creating infrastructure around the problems.
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Flipkart incorporated CoD to tackle the unwillingness of customer to use their credit cards for online shopping, and hence relying on the courier companies for the reconciliation of accounts and also paying a substantial cut to them. The firm increased the number of warehouses to support the on-time delivery and hence increasing the number of employees, which diminished their overall profit for a delivery. To overcome the problems generated by their extended infrastructure, Flipkart introduced Flipkart Logistics in the year 2010 to handle their in-house orders. It managed warehousing, packaging and the delivery (including CoD) of the products.
Flipkart recently expanded their business by including electronic goods and other consumer products. With the launch of Amazon India, It is not easy for Flipkart to survive in the Indian e-commerce sector, but the zeal and dedication of the duo for their endeavor gives a intuition that Flipkart will take a run for the better.
The first book, which Flipkart sold, was titled ‘Leaving Microsoft to Change the World’ by John Wood, who worked as an executive for Microsoft and later left his job to found a non-profit organization Room to Read, which focuses on increasing literacy and gender equality in developing nations. The motto of Flipkart too at the time of its launch was to provide easy access of the books to the people, with making a little profit for them. I, myself, as an ardent customer of Flipkart, which proved, at least to me that books, which you want to read rather than the books you choose from the best available options at a book-store, can be delivered to your door-step within a day or two, wants to see the firm shine once again. Sachin and Binny Bansal, as young entrepreneurs have motivated many to follow their dreams with the fervent ardor, rather than strangling them to a painful death while building the others. Flipkart evolved, as it was laid on the bricks of passion wrapped with reason, but somehow I feel that the management of the firm has lost its ability to judge the present market scenario with the comprehensible reasons. I personally apprehend that Flipkart should manage and expand its business based on reasons rather than just on a mere fanaticism to become the India’s biggest e-commerce firm, which will eventually lead them to their raison d’être, as Gibran once said:
“And let your soul direct your passion with reason, that your passion may live through its own daily resurrection, and like the phoenix rise above its own ashes”