India’s E-commerce industry is projected at $200 billion by 2026, up from $120 billion registered in 2020. This massive growth will be due to increasing internet and smartphone usage and the impact of the Covid-19 pandemic. One of the early players in the E-commerce marketplace has been the home-grown Flipkart. What started off as an online e-book store in 2007, Flipkart now handles over 80 million products in 80+ categories making it among the leading e-commerce player in India, next only to Amazon. Flipkart had estimated sales of $ 6.2 billion compared to Amazon’s $7.5 billion. Flipkart is now at the number one position at $3.8 billion vs. Amazon’s $3.20 billion in terms of revenue.
One of the few sectors which have thrived during the Covid-19 pandemic is the E-Commerce sector. While the impact of the lockdown was felt across many industries globally, online shopping increased manifolds as people relied more on this mode of transactions. For consumers, digital online shopping is no more an option, rather a necessity that ensures convenience, availability, and safety.
The e-commerce industry opened opportunities for direct and indirect stakeholders in the supply chain and opened up opportunities for new concepts. The Indian online market has now spread across to grocery and personal care and wellness segment. Flipkart was a pioneer in electronic and consumer durable but later now diversified to other segments. One of the electronic products showing astonishing growth has been the smartphone shipments of 150+million units and 5G models at 4+ million in 2020 alone. This demand was propelled in the post-lockdown period.
Amidst the pandemic, Flipkart flourished with diversification into the wholesale and hyperlocal delivery segment.
A two-bedroom apartment in Bangalore was used to start an online bookstore company in 2007. The Co-founders, Sachin Bansal, and Binny Bansal, IIT Delhi Graduates, were employed with Amazon, but both decided to start a similar e-commerce company like Amazon but India centric. From the bookstore, it started selling other products like music, movies, and mobile phones. As the e-commerce segment started growing, they kept on adding different categories of products to the platform.
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The Ideal Combination of the Founders
Sachin Bansal was more aggressive and took bold decisions, while Binny Bansal was the thinking type about how to implement ideas. The founders faced a setback in the early days as India was still not ready for digital entrepreneurship. Despite being in start-up funding, venture capitalists did not have the confidence in an Indian indigenous internet company.
The Bansal’s failed to convince investors, friends, and others to join their start-up. They managed to hire two employees, one who had lost his job as a packaging worker and another person who owned a laptop. They also somehow convinced a small investor to invest $1 million in 2009, but it took them 18 months to get the funds. Luck favoured them as they received unsolicited funding from a global hedge fund in New York, Tiger Global, which invested $10 million.
The Journey of Flipkart
For the next five years, the co-founders went on a mission to validate their founding idea and set up a world-class internet platform that offered excellent services to its customers, added new products, played with price cuts, and expanded its reach. Business doubled every quarter, and new investors came on board. In 2011 it acquired an office in Singapore. The acquisition of another online retail brand Myntra for $400 million in 2014 and fashion website Jabong, for $70 million in the year 2016 allowed Flipkart to expand its product base. In 2017, it acquired the e-commerce giant eBay and payment website PhonePe.
As Flipkart rose exponentially, it lifted the entire internet start-up ecosystem. The initial reluctance of other entrepreneurs, investors, employees, and others who chosen to stay out gave way to belief and optimism that India could sustain the e-commerce business. This was further strengthened as internet and smartphones usages showed sustained growth.
In 2018, Flipkart was acquired by the American retail giant Walmart who operated in the supermarket chain. The founders sold 77% share to Walmart and stepped down from the board. Flipkart was valued at $24.90 billion in 2020.
The Business Model of Flipkart
The company has more than an 80+million products in 80+ categories from computers, smartphones, electronic goods, home appliances, books, toys, jewellery, and many more. There are many similar eCommerce marketplaces like Flipkart, but the main USP of Flipkart is its pricing. The platform offers branded products that are attractively priced with discounts and other perks. Another attractive feature is its COD (Cash on Delivery), refund policy, and customer service that makes it stand out among its competitors. The company has contracted over one million square feet of space in the metro and other cities of India for warehousing and logistics to ensure prompt deliveries to customers.
On the opposite side of the platform is the Flipkart seller, whose entrepreneurial dreams got wings from the online retail opportunities provided by platforms like Flipkart. The opportunities and the logistic support provided by Flipkart to any seller who signs up is unlimited.
Flipkart is a B2C model company that allows its user to select the sellers and products from the wide range of items displayed on the platform. The platform uses the social media platforms like Instagram, YouTube, and Twitter to promote the items.
Flipkart has now taken over Walmart’s cash and carries wholesale business known as Flipkart Wholesale and another service known as Flipkart Quick. This service in Bengaluru is a hyperlocal delivery of retail items such as groceries, home accessories, mobiles, and electronic items. The platform has launched Ninja Cart, a supportive ecosystem for local vendors in the supply chain of fresh produce, and roped in logistic firm Shadowfax for the last mile connectivity for Flipkart Quick.
Post the pandemic, the customers are increasingly dependent on online shopping and its convenience. The online retail sector holds out promising potential for further expansion in the future. The Walmart-owned Flipkart seeks to take advantage of the massive Indian market.