As the dust settles on the major business headline of the last fortnight, we’re here to look what this really means for everyone. It’s more than just the snazzy headline that the Indian ecosystem need AND deserves. Many different perspectives have poured in within the short week. Amazon is clearly as (if not more) bullish as Flipkart because they took less than 24 hours to announce a massive $2 billion investment of their own. Kunal Bahl of Snapdeal has given his perspective of it Flipkart being overvalued. “Flipkart leads a $1 Billion round in venture capital” to become among the most valued venture-backed companies in the world. Before the naysayers swoop in to talk about the competition, big-pockets of Amazon and the 100 other challenges (many legitimate) that Flipkart still has to negotiate. But for just for a few minutes, it’s worth soaking in what something like this means for Flipkart, and the ecosystem at large in India. Having a being involved in since 2011 (few months before Flipkart raised it’s now meagre looking first-round), I want to share a little bit about what’s happened the last 3.5 years from my perspective. Contrary to popular belief, Flipkart were NOT the first one’s to venture into e-commerce in India In the first wave of the internet in India, many had tried to create the first e-commerce success story (read: Indiaplaza, Sify etc.). But they all but failed, and pretty miserably and without a sound. That round of the consumer internet went to the online travel companies (Cleartrip, Makemytrip), job portal (Naukri.com) and some marriage portals (shaadi.com, bharatmatrimony.com). Flipkart led the second wave and how! Here’s the couple of things I think they did really well:
Go big or go home
They didn’t see any value in growing organically when you’re ‘creating’ a market. They raised money quickly, spent heavily on above-the-line marketing from the get-go. They reached out people who weren’t shopping online, delivered a fantastic experience and got people talking about their services. Growth hacking both online and offline.
Logistics, logistics, logistics
Post acquiring/converting customers to buy online, Flipkart was quick to understand that the biggest bottleneck in the e-commerce experience in India was logistics. Late delivery, damaged goods on receipt, missing goods were all too often the norm in India. On top of that handling the return experience was extremely important to gaining the trust of customers to make shopping online the norm, rather than a one-off thing.
Culture, people and technology
The small yet telling sign, for me at least, was how good their bookmarks were right from the early days. It had become a thing – people waited to see what bookmark they got. They would take photos of it and share it on social media as well. To me it was a sign of a company geared towards customer excellence and taking care of the small things. Big thing was getting the book there is mint condition on time; small thing was letting the customer emotionally connect with your product. The other strain of culture was the bias (and a positive one) that they had towards technology. I would attribute some of this to the early exposure their Bay Area investors brought in with them.
“Move fast and break things”
They built out entire businesses like Payzippy from their existing funds and talent-poll. Ekart logistics is another spin-off that can be deemed big enough to be a logistics company in it’s own right. But they haven’t always got it right – key being that they had the gumption to shut it down the minute they thought something wasn’t working. This is clear reference to the audio streaming/buying website that they had called Flyte. After giving a lot of good music for almost free for shy of 9 months, they shut down because of mounting license costs and didn’t look back at it. Of course, it helps to have aggressive growth numbers to meet when you have investors in the game, but this strategy has helped them more than cost them. Failure is a part of the game, and they understand it.
Lastly, they raised a lot of money
And I mean this in the best way possible – irrespective of whether Flipkart fails or succeeds. No business model has been put through the scrutiny that the Flipkart’s model has been and the founding team must have fought through numerous troughs of doubts – both internally and externally. They took something that wouldn’t work at face-value in India (no online-payments, no reliable logistics, no organized distribution) and solved it. And convinced investors of this solution and dream. The ability to raise money almost at will to disrupt the entire retail industry, not just online, is in my books their biggest win. They gave themselves the opportunity to think of the bigger picture and execute at scale – which they did superbly well. I, for one, am in their corner – for what they did for startups and new businesses in India.
What this means for you
– It marks the official entry on online commerce and business in India. Ratan Tata considers e-commerce to be a good investment. Both Azim Premji and Narayan Murthy have their skin in the game. Reliance is rumoured to be working out a massive e-commerce play.
– This means the innovation may taper and make way for scale. Great news for those invested in this industry for a while.
– No matter what business you’re in, start thinking of ways you’re going to tackle the digital channel in. Does this mean fixing your website? Maybe building a community on Facebook? With scale becoming a reality in the country, people are going to start taking the internet seriously. Bigger numbers will purchase online (or if it’s for B2B, start using the internet as a credible first source of information)