Flipkart: Delivery boys

Published: December 23, 2014 1:49:08 AM

It wasn’t too long ago that the idea of shopping over the internet instigated fear in consumers’ minds instead...

It wasn’t too long ago that the idea of shopping over the internet instigated fear in consumers’ minds instead of inspiring confidence. The savvier among the small set of internet users took to banking services after many assurances from the banks. Merchandise, however, was considered a risky undertaking. But all this happened in the pre-Flipkart era. Launched as an online book retailer in 2007, the company changed Indian consumers’ approach to internet shopping. If few years ago internet shopping was considered a risky mission, today, it means low prices, large variety of products and services, convenience and above all, security. And Flipkart has played a crucial role in bringing about this change in consumer psyche. Sensing the hesitation among consumers to use their credit or debit cards online, Flipkart was the first company in the country to launch the cash-on-delivery model. Several other best business practices such as return or exchange of products, too, were initiated by Flipkart.

Launched by college friends Sachin and Binny Bansal, the company had been on a fund-raising mission in the past few years. It also acquired and merged a few rivals such as Myntra and Letsbuy, among a few others—a process that gave it a certain heft in a market that is getting crowded by the day.

While it has been an enterprising journey for Flipkart for the past several years, why we think it was one of the best marketers of 2014 is because it was this year that it emerged as the undisputed market leader not only in terms of its valuation but also total sales. Earlier this year, the company raised $1 billion from investors such as Tiger Global, Accel Partners and Morgan Stanley. The new investment pushed the company’s valuation to $7 billion allowing it a place among the top 10 privately held internet ventures in the world. The buzz is that the company is planning to raise anywhere between $500 million and $1 billion in a fresh round of funding before the close of the current financial year. While detractors have argued that Flipkart has gotten into a pointless game of valuations, those who believe in the company and its promoters and investors vision, say it will need hefty investments to withstand competition from aggressive rivals such as Amazon, the world’s largest etailer and Snapdeal.

Another highlight of 2014 was Flipkart’s “Big Billion Day” sale on October 6, promising customers never-before deals and discounts across more than 70 categories of products. Though rivals managed to punch a few holes in its targets and some consumers, too, were sour after less than satisfactory experience, it was an exercise that created a lot of buzz around Flipkart.

Flipkart is expected to close the current financial year with a revenue run rate topping $4 billion, a feat none of its rivals is likely to match at least this year. In March, the company said that it had hit $1 billion in sales, a first in the Indian market.  According to an October report by Gartner, an American information technology research and advisory firm, ecommerce in India is likely to cross $6 billion in revenues in 2015, recording a 70 percent increase from a year ago. This makes India one of the fastest-growing ecommerce markets in the Asia-Pacific region.

Also, the company achieved its own target.  Flipkart took just 10 hours to hit its target of $100 million in gross merchandise value (GMV), or the value of goods sold. It claimed have sold a whopping 5 lakh mobile handsets, five-lakh clothes and shoes and 25,000 television sets within hours of opening its discounted sale. Management consultant and author Rama Bijapurkar says that Flipkart is all of Crawford market now available online, but without the jostle and the sweat. “Flipkart is a brand built by what it delivered via its “product”.

Reliable, Flexible, ever growing merchandise and oh so convenient. Its challenge will come from the likes of Amazon and Snap deal. Hopefully, the brand battle won’t be about more range and service at less money but about brand emotion and personality and a clear concept of “who am I, why buy me”, beyond “leaner, meaner, stronger, more service and cheaper”, she says.

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