Flipkart was founded by two friends - Sachin and Binny Bansal. They were both alumni of IIT Dehli. During the college placements, they were hired by Amazon. Amazon had high hopes for India and was hiring the best of the best engineers, giving them generous salaries, The nasals also became a part of this elite club of learned engineers. A tech boom was going on and money was getting poured into tech startups. Investors were highly bullish on India as an economic powerhouse, Amazon has jumped on the bandwagon following the craze of IT in India.
Sachin and Binny Banal worked at Amazon for a while. They enjoyed their time on Amazon, Parties were common and it was all fun on Amazon because of the enormous sum of money invested by Amazon as well as the tech craze that followed suit. The Bansal although having an entrepreneurial mindset left Amazon after a brief time of 9 months, to the shock of the employees of Amazon and started working on the idea of Flipkart - which was previously envisioned as an online book-selling platform was created.
Customer is the King
The Bansals believed that the customer is the king approach. From the start especially Sachin Bansal believed in customer satisfaction, he wanted to create technology that would be for the benefit of the customer, his notion was appreciated in the company and it led him to gain a lot of traction and sales His "Cash on Delivery" (COD) payment option, introduced in 2010, was a significant innovation tailored to the Indian market, where credit card penetration was low and trust in online payments was minimal.
Raising Funds
raising funds was certainly a pain for the bansals, in the initial years although they were growing substantially they failed to secure any funding. The Bansals envisioned Flipkart to be an everything marketplace and to go abide by that, they needed funding. This was added to the fact that Flipkart was losing money quickly and would certainly run out of money in the coming years. Finally, in 2009, the company raised its first round of funding from Accel India, receiving $1 million. This investment allowed Flipkart to expand its operations, invest in technology, and improve its logistics network. Shortly after Tiger Global with the help of Lee Fixel made a funding round in Flipkart at a valuation of 42 million. Tiger Global and Lee Fixel played an extremely important role in Flipkart's success. Tigert Global in total gave a funding of a whopping 1.2 Billion dollars to Flipkart during the years. Lee was a very important element of Flipkart's success. It was quite rare that startups such as Flipkart received such big funding. The growth of Flipkart attracted several venture capitalists and news attention Within a few years Flipkart became a notable player in the Indian start-up ecosystem
Diversification
After gaining a big customer base, a great amount of funding and media attention, Flipkart decided to diversify its business. In 2010, the platform expanded into categories like electronics, such as mobile phones and laptops. By the end of 2011, Flipkart offered products in multiple categories, including fashion, home appliances, and personal care. This diversification led to the blueprint of Flipkart we see today
Power of Exclusivity
One of the pivotal moments of Flipkart's success was an exclusive partnership with Xiaomi. In the meeting room where people like Amitesh Jha, Sandeep Karva and Kalyan were seated, it was decided to increase and boost sales -- a concept of exclusivity would be adopted. In the next 12 months, Flipkart started reaching out to mobile phone companies like Samsung, Apple, and Micromax. Xiami was undecided about entering India on the other hand Motorola, was working on the launch in India for Months. The talks with Motorola had gone well. The HOD team flew to Dehli to meet the Motorola team. The team members of Motorola who were present in the meeting agreed to work with Flipkart. They proposed that they would not be able to work entirely exclusively with Flipkart but they agreed that the launch of Moto G would be exclusively on Flipkart. In early February 2014, at a flashy event in Dehli. The team proposed the launch of the Moto G phone exclusively on Flipkart. They had spent recklessly on advertising, and the front page of the newspaper was embodied with the Motorola ad. The effort paid off as within 5 minutes, Motorola sold more than 10,000 units, and within 15 minutes another 15000 units were sold. By the end of the day, the website sold 100,000 Moto phones - Absolutely Bonkers!
This strategy of exclusivity has been followed til now and is one of the most important strategies that Flipkart used that boost its success. In February 2014 Flipkart raked a gross sale of 1 Billion Dollar. If you had asked the basals where they would be now, their answer would be nowhere close to reality.
Acquisition of Myntra
Myntra was founded in 2007 by Mukesh Bansal, Ashutosh Lawania, and Vineet Saxena. Initially, it was started as a personalized gift item business it then changed to fashion and lifestyle products, eventually becoming one of India's leading online fashion retailers. By 2014, Myntra had established itself as a major player in the Indian fashion e-commerce space, known for its wide range of apparel, footwear, and accessories.
Flipkart decided to buy Myntra because of the growth prospect of the Lifestyle and clothing division. Flipkart bought Myntra in 2012 in a deal valued at 240 Million Dollars. While Flipkart was strong in categories like electronics, Myntra brought expertise in fashion and had an extremely loyal; customer base and website experience. Myntra did wonders for Flipkart becoming the best acquisition and asset of Flipkart till now.
The App - Only Disaster
In May 2015, Myntra made the bold decision to shut down its desktop and mobile websites and operate exclusively through its mobile app. This decision was driven by several factors
Rising Smartphone Usage: By 2015, India was witnessing a significant increase in smartphone adoption and mobile internet usage. The management at Myntra believed that focusing on a mobile-only strategy would align with the growing trend of mobile commerce
Enhanced User Experience: Apps offered the potential for a more personalized shopping experience, with features like push notifications, personalized recommendations, and in-app browsing tailored to individual user preferences.
Higher Engagement: Data suggested that app users tend to be more engaged and have higher conversion rates compared to desktop users. Myntra aimed to leverage these insights to boost sales and customer loyalty.
This backfired on Myntra, as they saw their sales dip. Consumers found Myntra's desktop website much more convenient and easier to operate than their rather feature-packed mobile app. The developers had poured a lot of effort into the creation of the app and were rather exhausted. They shut down their plan in February 2016, less than a year after going app-only.
Walmart entry
The acquisition of a majority stake in Flipkart by Walmart was one of the most significant events in the history of global e-commerce. This $16 billion deal, announced in May 2018, markets Walmart's entry into India's E-commerce. India was rapidly developing, and the investor's sentiments were higher than ever. The growth of Internet India and the introduction and the explosion of 2g and 3g in India made India the hub for Tech Unicorn as during those years companies like BookMyShow etc reached their peak. India was lifting from the call centre. The disposable income of people had increased drastically hence exciting Walmart to enter this deal
Amazon, Snapdeal and the herd
The success of Flipkart, excited several entrepreneurs and Venture Capitalist. Snapdeal became one of the key players next to Flipkart. Snapdeal never became close to Flipkart because of its size, unfortunately, Snapdeal just withered away aout from the startup ecosystem because of a bad decision. Snpdeal Downfall was a trigger to VC as Snapdeal itself was highly reputed and funded. snap deal diversified into various segments, including logistics and digital payments. These acquisitions were intended to create some sort of ecosystem but drifted away from the main focus of E-commerce. Consumers complained about the laggy website, poor [product quality and customer service, which led to the downfall of Snapdeal. Snapdeal is still struggling to gain an effective market cap
Amazon entered India with a dash. Jeff visited India and had a meeting with the prime minister. Amazon invested more than 5 billion dollars in India. Amazon also had an iconic advertising campaign and a wider variety of things. Amazon became (and still is) the biggest competitor of Flipkart. Amazon and Flipkart are fighting head to head in the unformidable battlefield of better customer experience, price war and services. Ironically, Amazon was about to buy Flipkart when it was worth nothing.
Lessons from the growth of Flipkart at a Glance
consumer obsession should be in an entrepreneur's DNA
The best way to beat a competitor is to be prepared
A good HOD is a necessity in every business, it can be a factor of a good company and a great company
Moderate-pace diversification helps in the growth of the business
The best way to beat the competitors is in their own game
Credits
The article is written on extensive research mainly on a book name - " Big Billion Startup " - by Mihir Dalal.
image credits: Flipkart Stories
image credit: Startup Talkies
image credits: Getty images
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