Surfing has been one of my favourite experiences so far, or rather trying to surf, nevertheless I still love it. When I stepped onto that beach for the first time with a surfboard in my hand, I thought it was going to be a breeze and that I’ll be surfing in no time! Little did I know that I would be thrown over, face down, legs up into the crashing waves repeatedly for about two hours non-stop. It was horrible!
It’s an art that is quite hard to grasp at first but when you do, it’s totally worth it. Falling off your board into an explosion of white water, licking your salty lips whilst looking for your board, jumping back up and heading for the next big wave is an experience in itself. Struggling yet persevering wave after wave is the only way to become a great surfer.
When most businesses start-up, it always seems like the best idea in the world. However, converting those personal traits and vision for your business into something successful is a hard act to follow; especially if there is no experience or proper plan in play.
Flipkart is an Indian e-commerce company that was founded by two ex-Amazon software engineers who built their company with the vision of being the ‘Amazon of India’. They too went through some hard sledding initially since everyone thought they had a snowball’s chance in hell at being successful.
Wave after wave they were pushed down and thrown off their surfboards, but nevertheless they managed to get back up and ended up, rather unexpectedly, surfing the big waves and dominating their industry. At present, they are India’s leading e-commerce company with an astonishing net worth of approximately US$ 20 billion.
Let us analyse how Flipkart overcame the waves they faced and how they continued to surf on to be an Indian success story.
The Logistical Wave
Logistics had been an ongoing issue in India, primarily due to their vast geographical region, inability to reach the rural areas and lack of efficiency in their local postal system – which were used by many small businesses. For companies who could afford air logistical services – which rounded up to about 90% of businesses, the domestic airlines would frequently remove their parcels to make room for passengers. This resulted in late deliveries, misplaced parcels and occasionally, no-show deliveries.
Flipkart began studying and analysing their customers through their feedback channels. They came to the conclusion that their customers had the most trouble with delays in delivery and product damage; with a frequency of 21.4% and 14.3% respectively.
When it seemed like Flipkart had no way out of this logistical wave, they took it upon themselves to solve this problem. They developed their very own logistics service company to act as an in-house supply chain arm, owned and controlled by them. They call it ‘Ekart’ and it is the best thing since sliced bread. Logistics is only the tip of the iceberg for Ekart as they also offer customer support and utilize the latest technology for order tracking, customer notifications, reporting, analysis and billing.
They built Ekart on the core principles of speed, convenience and reliability – everything that was lacking in the Indian logistics industry. Through the identification of this market gap, Flipkart is now known for their logistical efficiency and impeccable product delivery. All these additional services heavily contribute to the added competitive advantage and has been the best solution to solve this gigantic logistical wave.
The Financial Wave
Flipkart had little success in their initial investment roundings ever since they went public – this means they had limited funding to operate to their fullest potential. To add fuel to the flame, their operations followed a warehouse business model – which restricted foreign direct investments. This is because this model categorized Flipkart as a pure-retailer and India passed a law that companies of this nature could only obtain investments within the boundaries of India.
However, this did not stop Flipkart from overcoming this wave of financial struggle. Flipkart took the risk to completely re-wire their business model, hoping that they would come out stronger because of it. The new ‘hybrid marketplace model’ is where both businesses and consumers could trade with each other on the online platform that Flipkart had established – similar to that of eBay.
The hybrid model acted as a gateway for foreign direct investments as they were not categorized as a pure-retailer anymore. This enabled Flipkart to see a 476% increment in their funding, from $210 million to their first billion dollar investment, over a span of a few months. Furthermore, Flipkart no longer retained inventory of their own, instead buyers could deal with the sellers directly and the delivery would be performed by Flipkart themselves. This was ideal as Ekart – their logistics arm – provided all the necessary services at the lowest possible cost which completely turned the tables in their favour and gave them an added competitive edge.
Dominating the Big Waves
Flipkart had the best logistics service in India and had more money than they could have dreamt of. After about 7 years subsequent to their inception, Flipkart had become a well experienced and a top e-commerce company in India. Amazon India was riding bigger waves being the market leader at the time, however Flipkart was not too far behind.
As university students, the minute we get our ‘money for the month’, we go bonkers! We feel like the richest people in the world and end up busting all our money. After the second week, I am pretty sure you’d notice the demand for cup-noodles rising as that’s all we could afford to eat and also, you would notice more students walking about, instead of taking cabs, struggling to save a buck or two. That’s just how it is, and believe or not but businesses can put themselves in the same boat too. This usually occurs if they don’t have a good plan and a budget in place – but Flipkart was not like that.
Flipkart strategically planned out their funding and invested it into areas which they predicted would be the most beneficial to the business. They engaged in making numerous acquisitions to further build their brand. They also specifically catered to the needs and wants of the Indian market, by acquiring Myntra, one of India’s most famous fashion e-retailers and Jabong too.
Through these acquisitions they were able to completely dominate the market. Their estimated monthly traffic was 70.7% of the entire Indian online population – due to the synergy of Flipkart, Mantra and Jabong. Flipkart was now geared to face the mammoth of the e-commerce industry, Amazon. They eventually knocked Amazon off the market leader position in 2017 and have secured it since.
Age Doesn’t Matter if You Have the Attitude and the Drive to Succeed
– Sachin Bansal: Founder of Flipkart
Flipkart faced some huge waves in their journey as a business, some of which were governmental and completely out of their control. Nevertheless, they grabbed their board, climbed back up and faced wave after wave. They found loopholes in the system, started more companies and even acquired existing companies to get to the market leader position, that they have deservedly secured today. Not swaying away from their attitude and drive to succeed is what helped them along their entire journey and were the two key ingredients to their success.
Thanks for the read and till next time,