wordpress blog stats
Connect with us

Hi, what are you looking for?

Flipkart Founders On Plans, Marketplaces, Categories, Regulation, Disbelievers Post $200M Fundraising

Flipkart co-founder Sachin Bansal is pitching the company’s $200 million fundraising as a validation of the e-commerce in India, despite the fact that Flipkart and a few others are the last-men-standing in a battlefield that is strewn with e-commerce casualties, and India’s FDI policy disallowing foreign investment in e-commerce spooking most venture capitalists. Venture capitalists are clearly choosing their bets, and Flipkart is among the chosen ones, though some (on Twitter) are saying that this is a case of gamblers ruin; as I write this, I see on twitter, references to Casino Royale, with Flipkart and Amazon at the table.

Bansal, though, is optimistic, saying “It’s a validation of the e-commerce industry and that it’s here to stay and will grow big. It’s a validation of our thoughts and beliefs, the way we have thought of customers delight, building the vendor ecosystem, and the way we have been able to continuously coming up with new things that have helped growth. E-commerce last year was over a billion dollars, and research shows it will be $75 billion by 2021. 30-40% of India will be online by 2021, mobile will be bigger than PC, and as the size of retail becomes bigger, and e-commerce companies, and warehousing and logistics will grow.”

“This is the biggest rounds ever raised by an e-commerce company in India, and among the biggest rounds raised by an internet company in India. It’s proof and we’re setting a new trend in terms of investment sizes that Internet companies can attract,” Bansal said.

In a Q&A with online websites, Sachin and Binny Bansal spoke about their plans. First, some numbers:

– “Last month, on a single day, we did around 3 lakh shipments in a day. That’s around 1.5 shipments per second.”
– Almost reached 1 crore registered users. “We’re currently at 96 lakhs”.
– We are on target to touch our billion dollar GMV goal, and we’re more than halfway there.
– We get almost a million unique visitors in a day.
– In a year, we attract 8 crore visitors, equal to the population of the top 20 cities (in India).

Advertisement. Scroll to continue reading.

Some notes from the concall:

– On IPO plans (is this a pre-IPO investment?):  “We are very well funded. We will continue to evaluate all options, but there is no question of an IPO right now.”

– On what the funds will be used for: “Will be used for the tech platform that we are building for supply chain management. The second thing that it will be used for is the supply chain.”

“At that (very large) scale, the amount of automation and the world class infrastructure, will be a lot. We will have to work harder on the supply chain side. We have been a supply chain company, and we need to handle millions of shipments a day, and not lakhs. Lastly, talent pool, and we are severely contained by talent. There is no ready-made talent available in India, and we will invest in hiring the right people, and also giving them the right training. We need to do this at a much larger scale.”

“From a shipment point of view, we’re looking to scale up 3-4x in the next few years.”

“Supply chain is both about infrastructure and people. If we want to do 4 lakh shipments a day, we need to plan ahead of time. That requires funds to hire and retain. Then it is infrastructure, warehousing, automation, conveyor belts… We’re talking about world class systems that we are bring into India.”

Advertisement. Scroll to continue reading.

– On the marketplace business: “Marketplace was an experiment that has gone better that we expected. We have nearly 500 sellers. Some of the sellers are facing supply chain issues because they are getting into thousands of shipments. We are still at an early stage on a marketplace side. We are a very managed marketplace. Over time we will become more and more open. Target is to get to thousands of sellers by end of this year. We want to get to tens on thousands by end of next year.”

On the difference between Flipkart’s marketplaces and other marketplaces, Binny Bansal said that “We’re looking at a much more managed marketplace, and we want to control as much of experience possible from fulfilment and logistics. It is still going to be people intensive. We’ll still need to keep investing.” Sachin Bansal added that the biggest problems sellers face are to do with getting customers and the supply chain. Flipkart is helping address these issues. So then, is the only difference between how it was earlier and how it is now, from a billing perspective? Not quite. Sachin Bansal pointed out that sellers are now deciding how to price and catalog goods on the platform.

On the impact of the marketplace model on margins: “Overall, margin is not a focus area for us. We can be profitable today if we want to.”

– On Electronics: “We enter at the right time, and we’re able to take the market away from the slow moving incumbents. We have to balance our supply chain capabilities, and we have to manage the customer experience.

Note that Flipkart had recently stopped retailing large electronics like TV sets. In response to our question on this, Sachin Bansal said “Our philosophy is that if we can’t do a category well, from a customer point of view, we roll it back. The size of supply chain investments is actually pretty high. We have to build a different kind of investment for TVs (and others), and that is what we are working on. We’ve taken a small step back, and are working on building an experience.”

– On Flyte (and Music): “The timing was not great and there were questions about the business model.” “Apart from other things that did not go well. The biggest thing that was invalidated was the business model. We don’t know what that will be.”

Advertisement. Scroll to continue reading.

– On E-books and other digital goods: ” This hypothesis has not been invalidated, and we will continue to invest around that. Movies and games, on that side, we believe that pay per download is not the right way to go. We are going to re-evaluate.

(on Ebooks) Publishers need to be convinced that there is no possibility of piracy. Mekin (Maheshwari) took charge of digital and he’s focused on digital, now that Flyte has gone, we can focus on e-books. ”

There are no plans to launch self-branded physical e-book readers.

– On Fashion and taking a leadership position: Fashion appears to be the key focus going forward: “Can Flipkart become a leader with Fashion as well? Can we compete with the incumbents in this space? We are on the path to becoming a leader in Fashion, and we’re targeting that by Diwali.”

– Regulatory issues: “E-commerce has become very significant. It has appeared as a big sector. Government had not thought about it before. We are a large India-wide operation, and government bodies will have questions for us. We are committed to answering them, and being compliant with all the laws of the land. At some level, where we don’t think they’re favorable, we work with trade bodies.”

– On no new investors: “Our investors are large investors. Accel manages $9 billion, Tiger is tens of billions, and Naspers is even bigger. If they wouldn’t be re-investing I would be more worried. I’m not worried about no new investors coming in. We believe in strengthening the relationship with people we already know. But it’s not business as usual, it’s a huge round.”

Advertisement. Scroll to continue reading.

– On disbelievers: “When we started in 2007, at that time, a few people asked us why are you even trying it. It has not taken off. We captured the market and became the leaders in three years, and we proved people wrong. Then we were asked about electronics and we got the same questions, and we proved them wrong. We were able to capture the mindshare and marketshare away from the incumbents. We’re doing similar things with fashion.

Written By

Founder @ MediaNama. TED Fellow. Asia21 Fellow @ Asia Society. Co-founder SaveTheInternet.in and Internet Freedom Foundation. Advisory board @ CyberBRICS

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

Views

News

When news that Walmart would soon accept cryptocurrency turned out to be fake, it also became a teachable moment.

News

The DSCI's guidelines are patient-centric and act as a data privacy roadmap for healthcare service providers.

News

In this excerpt from the book, the authors focus on personal data and autocracies. One in particular – Russia.  Autocracies always prioritize information control...

News

By Jai Vipra, Senior Resident Fellow at Vidhi Centre for Legal Policy The use of new technology, including facial recognition technology (FRT) by police...

News

By Stella Joseph, Prakhil Mishra, and Yash Desai The Government of India circulated proposed amendments to the Consumer Protection (E-Commerce) Rules, 2020 (“E-Commerce Rules”) which...

You May Also Like

News

Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...

News

By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

Advert

135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...

News

Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Name:*
Your email address:*
*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ