How Flipkart wrote its book of success in the online world
Sachin Bansal’s broad vision for his firm is to emulate his former employer, the world’s biggest e-tailer, Amazon.
Starting out with just books, Flipkart.com now sells movies, music, games, mobiles and, since last month, cameras and computers.
“Next fiscal, we will start selling other electronic items like printers, Mp3 players, televisions and audio systems,” Bansal, 29, says on the phone from Bangalore, where Flipkart is headquartered.
These new products along with Flipkart’s existing offerings, he believes, will help the start-up clock revenues of Rs500 crore by March 2012, a sixfold growth over the Rs70-75 crore the company hopes to earn this fiscal.
Flipkart ended 2009-10 with a topline of about Rs20 crore.
With the rapid expansion of its portfolio, is Flipkart losing its USP as an online bookstore?
“No, I don’t think so. We were very clear from the start we wanted to be an online retailer for everything and not just books,” responds Bansal.
So, why did Flipkart choose books to begin with?
“That’s the easiest for a start-up to sell online. People don’t trust a new portal with Rs5,000 for a mobile phone but they don’t mind buying a Rs 100 book. We are still very focused on books and will try to grow that faster than other segments,” he adds.
Though he refrains from disclosing the share of books in Flipkart’s business, Bansal says they still contribute the most to its revenues.
Contrary to popular perception that the habit of reading, and hence book buying, is on the wane, he asserts that the industry is growing 15-20% annually, with online sales doing better than physical transactions.
Since Flipkart offers a 15-20% discount on almost every book, the portal is largely-volume driven. Flipkart sells about 1.5 lakh books a month or roughly 3.5 books a minute.
It has four warehouses in Bangalore, New Delhi, Mumbai and Kolkata from which it despatches its products. “We’ll be expanding the capacity at these warehouses and setting up new ones in a few more cities,” Bansal says.
Flipkart, which is currently operationally profitable, will spend Rs 10 crore each on warehouses and technology next fiscal. “We are also hiring at all levels. In a year, we’ll have 2,000 people from 600 now,” he states.
The online market in India, excluding travel and classifieds, is tipped to be worth $150 million.
Asheesh Raina, principal research analyst at technology market research firm Gartner India, says the success of the industry hinges largely on the security levels of the transactions.
“The advent of handheld devices will also help in better penetration,” he observes, adding that online shopping has picked up in a big way in areas like movie, train and air ticket booking, but not so in purchase of things like electronic items.
Flipkart faces competition from players like Indiatimes, Rediff, Indiamart, Indiaplaza and Letsbuy, among others. But it hopes to ride into small towns on the goodwill earned since its founding in 2007 by Bansal along with his colleague at Amazon and friend from his alma mater IIT Delhi, Binny Bansal (no relation to Sachin).
The company has attracted funding from two venture capital firms, Accel Partners and Tiger Capital, who reportedly pumped in Rs 4 crore in 2009 and Rs 47 crore the following year respectively. Bansal does not confirm these figures for reasons of confidentiality.
Flipkart will likely bring on board another investor this year to fund its growth plans, according to Bansal.
Given that the company’s revenue targets are not miniscule, is going public an option for Flipkart?
“We will evaluate it in a year based on our performance,” he adds.
Starting out with just books, Flipkart.com now sells movies, music, games, mobiles and, since last month, cameras and computers.
“Next fiscal, we will start selling other electronic items like printers, Mp3 players, televisions and audio systems,” Bansal, 29, says on the phone from Bangalore, where Flipkart is headquartered.
These new products along with Flipkart’s existing offerings, he believes, will help the start-up clock revenues of Rs500 crore by March 2012, a sixfold growth over the Rs70-75 crore the company hopes to earn this fiscal.
Flipkart ended 2009-10 with a topline of about Rs20 crore.
With the rapid expansion of its portfolio, is Flipkart losing its USP as an online bookstore?
“No, I don’t think so. We were very clear from the start we wanted to be an online retailer for everything and not just books,” responds Bansal.
So, why did Flipkart choose books to begin with?
“That’s the easiest for a start-up to sell online. People don’t trust a new portal with Rs5,000 for a mobile phone but they don’t mind buying a Rs 100 book. We are still very focused on books and will try to grow that faster than other segments,” he adds.
Though he refrains from disclosing the share of books in Flipkart’s business, Bansal says they still contribute the most to its revenues.
Contrary to popular perception that the habit of reading, and hence book buying, is on the wane, he asserts that the industry is growing 15-20% annually, with online sales doing better than physical transactions.
Since Flipkart offers a 15-20% discount on almost every book, the portal is largely-volume driven. Flipkart sells about 1.5 lakh books a month or roughly 3.5 books a minute.
It has four warehouses in Bangalore, New Delhi, Mumbai and Kolkata from which it despatches its products. “We’ll be expanding the capacity at these warehouses and setting up new ones in a few more cities,” Bansal says.
Flipkart, which is currently operationally profitable, will spend Rs 10 crore each on warehouses and technology next fiscal. “We are also hiring at all levels. In a year, we’ll have 2,000 people from 600 now,” he states.
The online market in India, excluding travel and classifieds, is tipped to be worth $150 million.
Asheesh Raina, principal research analyst at technology market research firm Gartner India, says the success of the industry hinges largely on the security levels of the transactions.
“The advent of handheld devices will also help in better penetration,” he observes, adding that online shopping has picked up in a big way in areas like movie, train and air ticket booking, but not so in purchase of things like electronic items.
Flipkart faces competition from players like Indiatimes, Rediff, Indiamart, Indiaplaza and Letsbuy, among others. But it hopes to ride into small towns on the goodwill earned since its founding in 2007 by Bansal along with his colleague at Amazon and friend from his alma mater IIT Delhi, Binny Bansal (no relation to Sachin).
The company has attracted funding from two venture capital firms, Accel Partners and Tiger Capital, who reportedly pumped in Rs 4 crore in 2009 and Rs 47 crore the following year respectively. Bansal does not confirm these figures for reasons of confidentiality.
Flipkart will likely bring on board another investor this year to fund its growth plans, according to Bansal.
Given that the company’s revenue targets are not miniscule, is going public an option for Flipkart?
“We will evaluate it in a year based on our performance,” he adds.
Internet: Com 2.0
Binny Bansal, co-founder of Flipkart.com, is a case in point. Binny and Sachin Bansal came up with the idea of starting Flipkart.com in 2006, to sell books online, while they were both working at Amazon’s development centre in India. (Little wonder that their company is now called the Amazon of India.)
Clearly, the concept itself was not new. But both partners knew that the challenge was to gain the customer’s trust.
“Other websites were not easy to use. There wasn’t a good enough selection and the search function was poor. On the back end, books wouldn’t be delivered on time and there was no customer support. That’s why nobody was able to build trust. After all, the customer is paying you without knowing you,” says Binny Bansal.
Flipkart put into place a more intuitive interface. But the real effort was offline — building warehouses to ensure that books reach customers quickly and in good condition.
“What we tell everyone is that 80% of what we do is not visible on the website. We spend a lot of time building basic infrastructure, just as any retailer would do,” says Bansal.
According to him, Flipkart earned revenues around Rs25 crore last year, and Rs2.5 crore in the year before that. This year they are expecting to earn around Rs120 crore. These are impressive figures, but unlike the entrepreneurs of 1999-00, Bansal is thinking long-term.
Flipkart has had two rounds of funding so far. “We were close to breaking even when we got our first round of funding. But we have been investing everything in expanding our infrastructure. It will take longer for us to be profitable, but we are
not thinking of an exit strategy right now,” says Bansal.
Clearly, the concept itself was not new. But both partners knew that the challenge was to gain the customer’s trust.
“Other websites were not easy to use. There wasn’t a good enough selection and the search function was poor. On the back end, books wouldn’t be delivered on time and there was no customer support. That’s why nobody was able to build trust. After all, the customer is paying you without knowing you,” says Binny Bansal.
Flipkart put into place a more intuitive interface. But the real effort was offline — building warehouses to ensure that books reach customers quickly and in good condition.
“What we tell everyone is that 80% of what we do is not visible on the website. We spend a lot of time building basic infrastructure, just as any retailer would do,” says Bansal.
According to him, Flipkart earned revenues around Rs25 crore last year, and Rs2.5 crore in the year before that. This year they are expecting to earn around Rs120 crore. These are impressive figures, but unlike the entrepreneurs of 1999-00, Bansal is thinking long-term.
Flipkart has had two rounds of funding so far. “We were close to breaking even when we got our first round of funding. But we have been investing everything in expanding our infrastructure. It will take longer for us to be profitable, but we are
not thinking of an exit strategy right now,” says Bansal.
Sachin and Binny Bansal have brought back book-reading with a bang and now introduce a multi-category retail
We feel that partnership is the best way to conduct bussiness if you can find someone who complements your abilities
You need not read Alvin Toffer’s Future Shock or Powershift to realise that the future of business is online. Take 28- year-old Sachin Bansal, for instance. An IITian with a degree in Computer Science, he teamed up with his college mate Binny Bansal (they are not related) to start the Bangalore-based Flipkart.com. What began as an online bookshop with a difference, soon expanded to selling movies, music, games and even mobile phones. The ‘store at your door’ rapidly rose to No. 5 ranking on Google within two years of its launch. But what’s even more eye-popping is its fast and free home delivery anywhere in India while you get huge discounts up to 33 per cent. Of course, there are other e-tailers out there, but Flipkart is bigger and better. “We are No. 1 in our segment,” declares Sachin Bansal. “Flipkart is the largest online bookstore in India in terms of sales and number of titles. We are four times larger than our nearest competitor. And our goal is to provide the best and most superior service to our fast-rising customer base.”
Flipkart is a runaway success story, scripted by Sachin and Binny. Incepted in 2007 with an initial investment of Rs 4 lakh, the company’s revenue touched Rs 2.5 crore in 2008-09 and Rs 25 crore in 2009-10. And they expect to touch Rs 100 crore in 2010-11. Plus, an average quarter-to-quarter growth of around 90 per cent is good news to any investor. Flipkart claims to have sold more than five lakh books in the last two years.
However, that is only half the battle won. Flipkart has introduced other product categories like audio CDs, video CDs and DVDs, as well as games, software and mobile phones. The company expects to sell over 3,000 movie/music CDs and DVDs per month at the initial stage and 20,000 CDs/DVDs per month by the end of this year. So, it is no wonder that the partners were able to raise the second round of venture funding to the tune of $8-$10 million from Tiger Global Management. Their first round of funding came from Accel Partners in October, 2009.
“We want to be No. 1 in the country in these segments as well,” Sachin sounds confident. “We intend to get there by providing more titles and delivering the same superior customer service that has made us the largest online bookstore in India in just two years.”
The quality of the service and the owners’ dedication are all too obvious. Even the tiniest book that I have ordered (The Little Prince by Antoine de Saint-Exupéry that amounts to just 106 pages) resembled a hard cover 300-page book when it arrived. It definitely proves how much they buffer the book, so that it reaches you with no frayed edges. In contrast, one set of comics that came straight from Amar Chitra Katha, had torn pages and jagged edges. Landmark, too, delivered Shiv Khera’s You Can Sell, but the packaging was not on par with Flipkart. So, it is not too difficult to understand why the business is thriving. “We have sold more than half a million books till date and are currently selling at the rate of a book a minute,” details Sachin. “Fifty per cent of our sales have come from repeat purchases and we have registered almost two lakh customers so far.”
Flipkart is a runaway success story, scripted by Sachin and Binny. Incepted in 2007 with an initial investment of Rs 4 lakh, the company’s revenue touched Rs 2.5 crore in 2008-09 and Rs 25 crore in 2009-10. And they expect to touch Rs 100 crore in 2010-11. Plus, an average quarter-to-quarter growth of around 90 per cent is good news to any investor. Flipkart claims to have sold more than five lakh books in the last two years.
However, that is only half the battle won. Flipkart has introduced other product categories like audio CDs, video CDs and DVDs, as well as games, software and mobile phones. The company expects to sell over 3,000 movie/music CDs and DVDs per month at the initial stage and 20,000 CDs/DVDs per month by the end of this year. So, it is no wonder that the partners were able to raise the second round of venture funding to the tune of $8-$10 million from Tiger Global Management. Their first round of funding came from Accel Partners in October, 2009.
“We want to be No. 1 in the country in these segments as well,” Sachin sounds confident. “We intend to get there by providing more titles and delivering the same superior customer service that has made us the largest online bookstore in India in just two years.”
The quality of the service and the owners’ dedication are all too obvious. Even the tiniest book that I have ordered (The Little Prince by Antoine de Saint-Exupéry that amounts to just 106 pages) resembled a hard cover 300-page book when it arrived. It definitely proves how much they buffer the book, so that it reaches you with no frayed edges. In contrast, one set of comics that came straight from Amar Chitra Katha, had torn pages and jagged edges. Landmark, too, delivered Shiv Khera’s You Can Sell, but the packaging was not on par with Flipkart. So, it is not too difficult to understand why the business is thriving. “We have sold more than half a million books till date and are currently selling at the rate of a book a minute,” details Sachin. “Fifty per cent of our sales have come from repeat purchases and we have registered almost two lakh customers so far.”
Sachin Bansal
Binny Bansal
Flipkart
Just like any other startup, there were teething problems at Flipkart. To begin with, launching the business with more than 50,000 titles was a tough act. “We had to take care of a lot of things,” explains Sachin. “We had to partner with banks, suppliers and courier services that had no reason to believe us at that point in time.” As the Flipkart founders were not the first to arrive with such a concept, it was hard to convince people that they were not a fly-by-night company that might disappear before long. “There were problems with payment gateways too. Plus, we could not keep a huge inventory just then. At times, Binny and I had to visit bookstores personally, buy books and deliver them by paying from our own pockets. We did that because we knew that the first experience is important for building customer trust. Our efforts were fruitful, as the positive customer feedback and frequent repeat purchases indicate it so strongly.”
Will the iPad, Kindle and their ilk redefine book-reading or are these just fads that will die out soon? “If we consider India, Binny and I do not see iPad making a huge difference in the near future,” confides Sachin. “The prohibitive price of the iPad and other e-book readers is one of the reasons, of course. Plus, you also miss out on the romance of reading a book in its original form. An average middle-class family in India can’t afford a number of iPads for all its members. But it’s definitely possible to buy a number of books and more. The high price of e-books is another reason why iPads are not a feasible option right now. Of course, it’s a great piece of technology – we have no doubt about that. But it will take a few years before e-book readers can impact the Indian mass market.”
Contrary to the popular notion that the reading habit has died down over the years, Sachin feels that it is on the rise. “In fact, we feel that people’s interest in reading has steadily gone up all this while,” he affirms. “Frugal literature has revolutionised the entire publishing industry and lower prices certainly encourage people to read more.” Sachin is currently reading Rework by Jason Fried while his all-time favourite authors include Scott Peck and Salman Rushdie.
Sachin had initially worked with TechSpan, a systems integration and consulting firm, and then joined Amazon India in 2006. So, he had already learnt a few things about running a business before Flipkart happened. “My stint with TechSpan was very short. But it was my first job right after college and it did teach me how to work in a professional environment. I learnt a lot from Amazon, though. The most crucial thing was working with large-scale distributed systems which gave me great exposure on the technology side of the business. Apart from that, Amazon is a very customer-focused company and understanding that business principle helped us a lot when we started Flipkart.” Binny, on the other hand, worked with Sarnoff India’s US Defence Projects for 18 months before he joined Amazon in 2007.
“Although we started working right after IIT and gained valuable experience, we felt that we could add more value by starting our own business,” admits Sachin. “So, we decided to launch an online venture and zeroed in on a comparison shopping site.”
The IIT exposure helped as well – both strategically and technically. The partners analysed the pros and cons to figure out the competitive advantage of starting late, and the revelations were startling. According to their research, too many e-commerce ventures had come up over the years, but none of them had been designed to deliver cutting-edge customer service. “This knowledge forced us to rethink our business idea,” admits Sachin. “We decided to start with books because the prices are comparatively low and thus allow for customer trials with minimum risk. Logistics did not pose a big problem either. Consequently, the initial investment was not too high and the returns were good.”
Their background in Computer Science also helped them build robust systems, along with automated backend operations. “This was really important because when we were a small company and did not have the resources to hire people, automation helped us bring the costs down,” explains Sachin.
In the beginning, both partners used to supplement their skills for better and faster output. Today, they complement each other. “Binny and I have a lot in common; we have the same surname, we have grown up in the same city (Chandigarh) and gone to the same college. In 2005, both of us graduated from IIT Delhi in Computer Science. Maybe, all these help when we work together,” smiles Sachin. “Initially, we shared responsibilities for almost everything… marketing, technology, operations, customer service and sales. But as the business grew, each of us gained more specialised skills in lesser-known areas. In that sense, when we started, we supplemented and now we are complementing each other.” Their designations also convey it. While Sachin is the CEO, Binny is the COO – Sales and Operations.
Both Sachin and Binny believe that the ecommerce sector is one of the toughest to get into in India, and with good reason. “First of all, the risk appetite of Indian consumers is extremely low, especially when it comes to online buying,” explains Sachin. “Then, the country lags in Internet penetration and credit card usage. Indian customers traditionally believe in touch and feel; therefore, finding the right niche where this is not a hindrance is another key issue.”
However, the scenario is rapidly changing. Cheaper hardware, widespread Net connectivity, increasing use of plastic money and innovative revenue models like COD (cash on delivery) have helped bring thousands of buyers on board and the ecommerce space is bound to thrive in the near future. Needless to say, Flipkart is betting big on this trend.
Competition is rife, of course, and that is why Flipkart is expanding its bouquet of products to attract more people. What started as an online book mart, has evolved fast and gone into e-tailing mobile phones. Do you wonder why? Because the competition does the same, be it Infibeam or Indiaplaza. What’s more, other companies even sell new and used cars, flowers, gift items, electronics and appliances. Not to mention, lifestyle products and accessories like apparel, jewellery, eyewear and fitness gear. “We intend to do better by introducing more product categories and a wider range, supported by our great customer service,” elaborates Sachin.
The partners are happy with their online expansion plans and don’t intend to go brick-and-mortar just now. “It doesn’t add any value to our competencies for online business; neither does it gel with what we want to do – after all, we want to be leaders in the e-commerce category,” justifies Sachin.
While many advise against partnerships in business, Sachin advocates this format. “We feel that partnership is the best way to conduct business if you can find someone who complements your abilities,” he reasons. “It also helps you think more objectively as there is someone who gives you a different perspective regarding any idea that you may have. Moreover, it also allows you to split responsibilities. Together, you can always achieve more in less time.”
However, Flipkart won’t get into self-publishing or custom publishing in the near future. The company is an etailer of stuff that people can buy easily, without worrying about price or quality. “Our future plan is to stick to what we do best – selling, to be precise,” affirms Sachin. “Due to huge customer demand, we are now selling CDs, DVDs, games and software products. And our goal is to provide the same kind of responsive and reliable customer service for these categories.”
Will the iPad, Kindle and their ilk redefine book-reading or are these just fads that will die out soon? “If we consider India, Binny and I do not see iPad making a huge difference in the near future,” confides Sachin. “The prohibitive price of the iPad and other e-book readers is one of the reasons, of course. Plus, you also miss out on the romance of reading a book in its original form. An average middle-class family in India can’t afford a number of iPads for all its members. But it’s definitely possible to buy a number of books and more. The high price of e-books is another reason why iPads are not a feasible option right now. Of course, it’s a great piece of technology – we have no doubt about that. But it will take a few years before e-book readers can impact the Indian mass market.”
Contrary to the popular notion that the reading habit has died down over the years, Sachin feels that it is on the rise. “In fact, we feel that people’s interest in reading has steadily gone up all this while,” he affirms. “Frugal literature has revolutionised the entire publishing industry and lower prices certainly encourage people to read more.” Sachin is currently reading Rework by Jason Fried while his all-time favourite authors include Scott Peck and Salman Rushdie.
Sachin had initially worked with TechSpan, a systems integration and consulting firm, and then joined Amazon India in 2006. So, he had already learnt a few things about running a business before Flipkart happened. “My stint with TechSpan was very short. But it was my first job right after college and it did teach me how to work in a professional environment. I learnt a lot from Amazon, though. The most crucial thing was working with large-scale distributed systems which gave me great exposure on the technology side of the business. Apart from that, Amazon is a very customer-focused company and understanding that business principle helped us a lot when we started Flipkart.” Binny, on the other hand, worked with Sarnoff India’s US Defence Projects for 18 months before he joined Amazon in 2007.
“Although we started working right after IIT and gained valuable experience, we felt that we could add more value by starting our own business,” admits Sachin. “So, we decided to launch an online venture and zeroed in on a comparison shopping site.”
The IIT exposure helped as well – both strategically and technically. The partners analysed the pros and cons to figure out the competitive advantage of starting late, and the revelations were startling. According to their research, too many e-commerce ventures had come up over the years, but none of them had been designed to deliver cutting-edge customer service. “This knowledge forced us to rethink our business idea,” admits Sachin. “We decided to start with books because the prices are comparatively low and thus allow for customer trials with minimum risk. Logistics did not pose a big problem either. Consequently, the initial investment was not too high and the returns were good.”
Their background in Computer Science also helped them build robust systems, along with automated backend operations. “This was really important because when we were a small company and did not have the resources to hire people, automation helped us bring the costs down,” explains Sachin.
In the beginning, both partners used to supplement their skills for better and faster output. Today, they complement each other. “Binny and I have a lot in common; we have the same surname, we have grown up in the same city (Chandigarh) and gone to the same college. In 2005, both of us graduated from IIT Delhi in Computer Science. Maybe, all these help when we work together,” smiles Sachin. “Initially, we shared responsibilities for almost everything… marketing, technology, operations, customer service and sales. But as the business grew, each of us gained more specialised skills in lesser-known areas. In that sense, when we started, we supplemented and now we are complementing each other.” Their designations also convey it. While Sachin is the CEO, Binny is the COO – Sales and Operations.
Both Sachin and Binny believe that the ecommerce sector is one of the toughest to get into in India, and with good reason. “First of all, the risk appetite of Indian consumers is extremely low, especially when it comes to online buying,” explains Sachin. “Then, the country lags in Internet penetration and credit card usage. Indian customers traditionally believe in touch and feel; therefore, finding the right niche where this is not a hindrance is another key issue.”
However, the scenario is rapidly changing. Cheaper hardware, widespread Net connectivity, increasing use of plastic money and innovative revenue models like COD (cash on delivery) have helped bring thousands of buyers on board and the ecommerce space is bound to thrive in the near future. Needless to say, Flipkart is betting big on this trend.
Competition is rife, of course, and that is why Flipkart is expanding its bouquet of products to attract more people. What started as an online book mart, has evolved fast and gone into e-tailing mobile phones. Do you wonder why? Because the competition does the same, be it Infibeam or Indiaplaza. What’s more, other companies even sell new and used cars, flowers, gift items, electronics and appliances. Not to mention, lifestyle products and accessories like apparel, jewellery, eyewear and fitness gear. “We intend to do better by introducing more product categories and a wider range, supported by our great customer service,” elaborates Sachin.
The partners are happy with their online expansion plans and don’t intend to go brick-and-mortar just now. “It doesn’t add any value to our competencies for online business; neither does it gel with what we want to do – after all, we want to be leaders in the e-commerce category,” justifies Sachin.
While many advise against partnerships in business, Sachin advocates this format. “We feel that partnership is the best way to conduct business if you can find someone who complements your abilities,” he reasons. “It also helps you think more objectively as there is someone who gives you a different perspective regarding any idea that you may have. Moreover, it also allows you to split responsibilities. Together, you can always achieve more in less time.”
However, Flipkart won’t get into self-publishing or custom publishing in the near future. The company is an etailer of stuff that people can buy easily, without worrying about price or quality. “Our future plan is to stick to what we do best – selling, to be precise,” affirms Sachin. “Due to huge customer demand, we are now selling CDs, DVDs, games and software products. And our goal is to provide the same kind of responsive and reliable customer service for these categories.”
True, indeed. Flipkart has an enviable collection of more than 20,000 movie titles, 12,000 music titles and loads of games. The movie collection starts at just Rs 30, music at Rs 45 and games at Rs 199 – eminently affordable, to say the least. The company will also start software retailing and sell popular products from Norton, Adobe and Microsoft.
Currently, Flipkart bestsellers include author-signed copies of Rashmi Bansal’s Connect the Dots, Karan Bajaj’s Johnny Gone Down, Robin Sharma’s The Leader Who Had No Title, Chetan Bhagat’s 2 States: The Story of My Marriage, Jeffrey Archer’s And Thereby Hangs a Tale and John Grisham’s Theodore Boone, among others. Among movie titles, the most popular are Sherlock Holmes, The Departed, The Hangover, My Name Is Khan and Bolt. In the games category, the most coveted titles are E-Play: Max Paine, God of War 2, Ben 10: Alien Force, GTA 4, Ghost Recon 2 and Cricket 04. In the cell phone segment, the toppers include Micromax Q1 and G4, HTC Legend, BlackBerry 8520 Curve, Nokia E63 and Sony Ericsson X10 Xperia.
As business is thriving, the Bansals plan to expand their operations to three more cities. At present, there is a 200- strong team at Flipkart but the staff strength will go up as well. “We are hiring on a regular basis, as we are growing rapidly,” says Sachin who prefers to travel and explore new places when he is not working.
A denizen of the technology domain, Sachin does live it and breathe it. By his own admission, he is a gadget freak and his latest acquisitions include a BlackBerry 8520 and the ubiquitous Apple iPad. “The BlackBerry lets me manage my mail, schedules and other activities… it’s really a great device that helps you save time.” Sachin is even more euphoric about the iPad. “Its real power lies in the number of apps you get. It’s a great tool for business and also a great travel companion. You can play games, listen to music or just relax with an e-book while travelling.”
Thankfully, the reading habit has not died down. Which means, the future generation is in safe hands. And technology makes sure that books will flourish in the time to come – through entrepreneurs like Sachin. Let us wish more power to his business.
Currently, Flipkart bestsellers include author-signed copies of Rashmi Bansal’s Connect the Dots, Karan Bajaj’s Johnny Gone Down, Robin Sharma’s The Leader Who Had No Title, Chetan Bhagat’s 2 States: The Story of My Marriage, Jeffrey Archer’s And Thereby Hangs a Tale and John Grisham’s Theodore Boone, among others. Among movie titles, the most popular are Sherlock Holmes, The Departed, The Hangover, My Name Is Khan and Bolt. In the games category, the most coveted titles are E-Play: Max Paine, God of War 2, Ben 10: Alien Force, GTA 4, Ghost Recon 2 and Cricket 04. In the cell phone segment, the toppers include Micromax Q1 and G4, HTC Legend, BlackBerry 8520 Curve, Nokia E63 and Sony Ericsson X10 Xperia.
As business is thriving, the Bansals plan to expand their operations to three more cities. At present, there is a 200- strong team at Flipkart but the staff strength will go up as well. “We are hiring on a regular basis, as we are growing rapidly,” says Sachin who prefers to travel and explore new places when he is not working.
A denizen of the technology domain, Sachin does live it and breathe it. By his own admission, he is a gadget freak and his latest acquisitions include a BlackBerry 8520 and the ubiquitous Apple iPad. “The BlackBerry lets me manage my mail, schedules and other activities… it’s really a great device that helps you save time.” Sachin is even more euphoric about the iPad. “Its real power lies in the number of apps you get. It’s a great tool for business and also a great travel companion. You can play games, listen to music or just relax with an e-book while travelling.”
Thankfully, the reading habit has not died down. Which means, the future generation is in safe hands. And technology makes sure that books will flourish in the time to come – through entrepreneurs like Sachin. Let us wish more power to his business.
Top 20 Bestselling Books at Flipkart
1. Connect the Dots (author-signed copies) by Rashmi Bansal (Eklavya Foundation)
2. And Thereby Hangs a Tale by Jeffrey Archer (PanMac)
3. Stay Hungry Stay Foolish by Rashmi Bansal (Shri Book)
4. The Immortals of Meluha by Amish (Tara Press)
5. The Leader Who Had No Title by Robin Sharma (Jaico)
6. Johnny Gone Down by Karan Bajaj (Harper Collins)
7. 2 States: The Story of My Marriage by Chetan Bhagat (Rupa & Co)
8. Theodore Boone by John Grisham (Hachette India)
9. Heartbreaks & Dreams! The Girls @ IIT by Parul A. Mittal (Srishti Publishers)
10. The Big Short: Inside the Doomsday Machine by Michael Lewis (Penguin UK/Allen Lane)
11. I Too Had a Love Story by Ravinder Singh (Srishti Publishers)
12. Don’t Lose Your Mind, Lose Your Weight by Rujuta Diwekar (Random House India)
13. May I Hebb Your Attention Pliss by Arnab Ray, GreatBong (Harper Collins)
14. Dork: The Incredible Adventures of Robin ‘Einstein’Varghese by Sidin Vadukut (Penguin India)
15. The Checklist Manifesto: How to Get Things Right by Atul Gawande (Penguin/Viking)
16. ReWork: Change the Way You Work Forever by Jason Fried, David Heinemeier Hansson (Random House)
17. The Official Guide for GMAT Review – 12th Edition Graduate Management Admission Council (John Wiley & Sons) 18. Bombay Rains, Bombay Girls by Anirban Bose (Harper Collins) 19. Simply Fly by Captain G. R. Gopinath (Harper Collins)
20. The Fountainhead by Ayn Rand (Penguin)
FLIPKART FACTS
1. Connect the Dots (author-signed copies) by Rashmi Bansal (Eklavya Foundation)
2. And Thereby Hangs a Tale by Jeffrey Archer (PanMac)
3. Stay Hungry Stay Foolish by Rashmi Bansal (Shri Book)
4. The Immortals of Meluha by Amish (Tara Press)
5. The Leader Who Had No Title by Robin Sharma (Jaico)
6. Johnny Gone Down by Karan Bajaj (Harper Collins)
7. 2 States: The Story of My Marriage by Chetan Bhagat (Rupa & Co)
8. Theodore Boone by John Grisham (Hachette India)
9. Heartbreaks & Dreams! The Girls @ IIT by Parul A. Mittal (Srishti Publishers)
10. The Big Short: Inside the Doomsday Machine by Michael Lewis (Penguin UK/Allen Lane)
11. I Too Had a Love Story by Ravinder Singh (Srishti Publishers)
12. Don’t Lose Your Mind, Lose Your Weight by Rujuta Diwekar (Random House India)
13. May I Hebb Your Attention Pliss by Arnab Ray, GreatBong (Harper Collins)
14. Dork: The Incredible Adventures of Robin ‘Einstein’Varghese by Sidin Vadukut (Penguin India)
15. The Checklist Manifesto: How to Get Things Right by Atul Gawande (Penguin/Viking)
16. ReWork: Change the Way You Work Forever by Jason Fried, David Heinemeier Hansson (Random House)
17. The Official Guide for GMAT Review – 12th Edition Graduate Management Admission Council (John Wiley & Sons) 18. Bombay Rains, Bombay Girls by Anirban Bose (Harper Collins) 19. Simply Fly by Captain G. R. Gopinath (Harper Collins)
20. The Fountainhead by Ayn Rand (Penguin)
FLIPKART FACTS
- The e-store sells more than a book a minute.
- Claims to be four times larger than its closest competition.
- Introduced cash-on-delivery in April, 2010, which amounts to 30 per cent of total sales.
- Added new product categories in June, 2010, including games, and CDs and DVDs of music and movies.
- Added mobile phones to its inventory in July, 2010.
- Initial investment: Rs 4 lakh.
- Revenue: Rs 2.5 crore in 2008-09; Rs 25 crore in 2009-10.
- Expected revenue: Rs 100 crore in 2010-11.
- Quarter-to-quarter growth: 80 per cent 100 per cent.
E-bookstores turn a new page
The next time you’re contemplating buying a novel from your neighbourhood bookstore, it would be a good idea to check its price across Indian online bookstores as well.You’ll be surprised by not just the competitive discounts each one has to offer, but also the availability and prompt delivery of that book.
That’s the pleasant reality of online bookstores in India, where the entry of new companies has meant that consumers can literally window-shop, until they arrive at the best deal. The pattern is similar to that of travel websites, where multiple players began to compete to provide the best airfares.
Amongst online bookstores, Bangalore-based Flipkart.com and Ahmedabad-headquartered Infybeam.com currently lead the pack nationally, in terms of market share. There’s also Tradus.in, owned by Ibibo, besides book sections on Indiaplaza.in, Rediff.com and Ebay.in which have been selling books for the past decade.
The new players, however, are competing with each other to offer better discounts and customer service. Flipkart, which was launched in 2007, says it has grown 10 times in revenues since March 2009 and has been channelising most of its efforts towards ensuring prompt delivery and reliability.
Sachin Bansal, CEO, Flipkart.com says, “When people come online to shop, they expect discounts. So discounts are here to stay and they’re not just launch strategies. But I don’t think cheaper prices alone will bring you customers. Customer satisfaction is very important.”
Rahul Sethi, president — e-commerce, Ibibo.com, says there’s good reason why the online shopping scene wasn’t as robust five years ago as it is now. “E-commerce has been abused for a better part of the internet’s existence in India. With terrible web connections, people don’t have great memories of their first online shopping experience.That scepticism still exists today, but we’re reducing his risk by giving him a discount.”
Overall, there are three factors responsible for the growing confidence of these enterprises in the Indian market. “Payments for railway and flight tickets have meant that online transactions are becoming more the norm than the exception. Further, internet speeds have improved significantly, thus allowing assured payment gateways. Thirdly, the increasing penetration of the web has meant that small towns can shop for even rare books, since retail is absent there,” says Himanshu Chakravarty, COO, Landmark Bookstores.
Landmark, for example, like other offline retailers, does not offer discounts because their high overhead costs do not allow them that liberty. Online bookstores, besides having minimal real estate costs, also eliminate middlemen from the book buying process, the benefit of which is passed on to the consumer, through a discount. “There’s a cost that adds to a book’s MRP at every level — publisher, distributor, sub-distributor, stockist, retailer and bookstore. The online model eliminates most of those middlemen,” says Sethi. Besides, an online bookstore employs only 25-40 people full-time.
Stocking of titles is also easier. Unlike a retail bookstore which can stock a limited number of books, an online bookstore can stock a much larger number. “We currently have 5.5 million titles —both national and imported. But this business is not about just having the widest range of titles, but the right partnerships. So we’re adding and partnering the right vendors who will supply books on time,” says Piyush Goel, co-founder, Uread.com.
“We have a real-time inventory. So if you order a book, I know immediately which of my partners stocks that book. We also stock titles in warehouses (located outside city limits, for cheaper real estate costs) and we have access to warehouse data of other distributors, as well.”
What’s more, an online bookstore enterprise can promise publishers sales in much higher volumes than a single bookstore, since consumers are spread across the country. Tradus.in’s Sethi says that it gets about 60% of its orders from cities that aren’t among the top 20. A key area where the Indian online bookstore market differs from the market globally is the immense popularity of the cash-on-delivery (COD) payment option. Uread.com’s Goel says, “In the US, for example, credit cards are far more popular, but in India people trust COD. We launched it last month on Uread.com and already it is responsible for about 70% of the transactions on our site.”
The popularity of online retailing is something even Crossword now wants to take advantage of. It currently doesn’t have an online shopping option on its website. “Online bookstores haven’t made much of a dent in our business, although they have slowed down growth in physical sales in certain categories, like bestsellers,” says Sivaraman Balakrishnan, manager-marketing, Crossword. “Consumers continue to shop for children’s books and merchandise at our stores, where touch-n-feel and visual delights are important.”
Retailers such as Crossword and Landmark say they don’t worry about the explosion in online retailing of books. Balakrishnan says, “We’re okay with the entry of new online bookstores or even physical stores, since it only increases our readership by giving more people access to books. The problem, however, is that the readership of books or the reading habit, is not proportionately growing.”
We are at The Oberoi in Bangalore and the previous night’s rain has brought to life the garden overlooking the lobby. It also seems to have energized the 28-year-old man I am sitting with.
Binny Bansal, COO and co-founder of Flipkart, initially comes across as shy and reserved. Clad in a T-shirt and a pair of denims, Bansal is far removed from the suit-and-tie image I had of the chief operating officer of a company whose 2010-11 turnover was Rs75 crore. But Bansal’s online retailing company is somewhat like him and its co-founder Sachin Bansal (not related to Binny)—there is more to the duo than their unassuming and low-profile public personae.
Both the Bansals did their software programming from the Indian Institute of Technology (IIT), Delhi. Before getting into the “technology of selling books”, Binny Bansal joined the US-based Sarnoff Corp., a firm that is into high-end automation projects for the defence and automobile industries, in Bangalore in 2005. In the year and a half he spent there, Bansal developed a lane sensor for cars—a mechanism enabling a camera in the car to detect road lanes. If the driver moved from one lane to the other without giving a signal, it would beep automatically. “There are lots of accidents in the West when people doze off on long drives and unconsciously move lanes. I was always into cool technology and working on this was fun.”
Today, Bansal has no qualms about being described as India’s Amazon.com. “Our vision was always to be the Amazon of India,” he says. Flipkart has around 10 millions books on its catalogue across different genres and is now moving into selling other products such as music and movie CDs, electronic goods, computers and peripherals. Every month it gets about six million visitors online.
Both the Bansals have worked for Amazon in the past. Sachin joined Amazon in January 2006, followed by Bansal in January 2007. Both quit in September 2007. “While at Amazon, we realized we should do something on our own since the scope for e-commerce was huge,” Bansal says, emphasizing: “I never wanted to go abroad unlike most IITians. I wanted to be in India but create something on the Internet using technology that we can create at home, hoard up and make millions of dollars.”
However, in late 2007, soon after the company’s launch, it still seemed a risk. “We were lucky since neither of us was married and didn’t have much family responsibility. Sachin and I put in Rs2.5 lakh each and started with seed money of Rs5 lakh.”
They began working from a two-bedroom apartment in Koramangala. One of the rooms was converted into an office. They tied up with all the distributors of major Indian publishers in Bangalore. Every day, one of them would go on a bike and buy books to make their own catalogue. “We would sit down on the floor and make the packages to give to the courier agencies for shipment. This went on for three months, with just two people running the whole show,” he says. Flipkart, headquartered in Bangalore, now has around 120 employees. Initially, few distributors or publishers took them seriously. So what has been the key to the company’s sudden rise? From a turnover of a few lakhs in the first year (2007-08) to Rs2.5 crore the next (2008-09), Rs25 crore in 2009-10 and Rs75 crore now (2010-11)—what was the real catalyst? “We needed to build a slick website that was fast, and where the discovery of the product was easy. Also, the payment delivery systems had to be easy and smooth,” says Bansal.
An important change took place around 2010: the payment mechanism. It’s a feature of Flipkart’s model that is distinct from Amazon’s.
“We looked at how Chinese companies—where e-commerce is huge—did retail online. The US has an established credit card culture, while China (like India) is a cash-based economy with lesser credit card penetration. So looking at e-commerce models in China, we put in place a cash-on-delivery system.” Today, more than 50% of their orders operate on a cash-on-delivery basis, Bansal says. Most importantly, on nearly each book a consumer buys through Flipkart, the price is “15-35%” cheaper than the cover price.
Though Bansal says Flipkart has transported books to “nearly every pin code in India, and definitely every pin code in Kerala”, 50% of their orders come from the metros: Mumbai, Bangalore, Delhi, Chennai, Kolkata and Hyderabad. The remaining buyers are from other parts of the country. Each day, Flipkart ships 1,000-odd items “through the government book post as so many villages don’t have courier facilities”. According to Bansal, the most saleable categories are fiction, trade paperbacks and Indian writers. More than 60% of Flipkart’s customers are working males between the ages of 25 and 35.
With the iPad and the Kindle, what is the future of books and booksellers such as Flipkart? Bansal thinks e-books are advantageous for outfits such as theirs. “It depends on which economies we speak of. In growth terms, India will be behind the West by four-five years when it comes to e-books. The projection for the US is that 50% of books will be e-books by 2015. In India, it will be by 2018 or 2020, not before that.” He says the demand for the normal paperback or hardcover is still high in India. “The e-format will dominate in India too, but not before the entire structure for it to take off has been set up,” he says.
The distribution model for e-books is online, so that’s a transition Bansal is waiting for.
That’s the pleasant reality of online bookstores in India, where the entry of new companies has meant that consumers can literally window-shop, until they arrive at the best deal. The pattern is similar to that of travel websites, where multiple players began to compete to provide the best airfares.
Amongst online bookstores, Bangalore-based Flipkart.com and Ahmedabad-headquartered Infybeam.com currently lead the pack nationally, in terms of market share. There’s also Tradus.in, owned by Ibibo, besides book sections on Indiaplaza.in, Rediff.com and Ebay.in which have been selling books for the past decade.
The new players, however, are competing with each other to offer better discounts and customer service. Flipkart, which was launched in 2007, says it has grown 10 times in revenues since March 2009 and has been channelising most of its efforts towards ensuring prompt delivery and reliability.
Sachin Bansal, CEO, Flipkart.com says, “When people come online to shop, they expect discounts. So discounts are here to stay and they’re not just launch strategies. But I don’t think cheaper prices alone will bring you customers. Customer satisfaction is very important.”
Rahul Sethi, president — e-commerce, Ibibo.com, says there’s good reason why the online shopping scene wasn’t as robust five years ago as it is now. “E-commerce has been abused for a better part of the internet’s existence in India. With terrible web connections, people don’t have great memories of their first online shopping experience.That scepticism still exists today, but we’re reducing his risk by giving him a discount.”
Overall, there are three factors responsible for the growing confidence of these enterprises in the Indian market. “Payments for railway and flight tickets have meant that online transactions are becoming more the norm than the exception. Further, internet speeds have improved significantly, thus allowing assured payment gateways. Thirdly, the increasing penetration of the web has meant that small towns can shop for even rare books, since retail is absent there,” says Himanshu Chakravarty, COO, Landmark Bookstores.
Landmark, for example, like other offline retailers, does not offer discounts because their high overhead costs do not allow them that liberty. Online bookstores, besides having minimal real estate costs, also eliminate middlemen from the book buying process, the benefit of which is passed on to the consumer, through a discount. “There’s a cost that adds to a book’s MRP at every level — publisher, distributor, sub-distributor, stockist, retailer and bookstore. The online model eliminates most of those middlemen,” says Sethi. Besides, an online bookstore employs only 25-40 people full-time.
Stocking of titles is also easier. Unlike a retail bookstore which can stock a limited number of books, an online bookstore can stock a much larger number. “We currently have 5.5 million titles —both national and imported. But this business is not about just having the widest range of titles, but the right partnerships. So we’re adding and partnering the right vendors who will supply books on time,” says Piyush Goel, co-founder, Uread.com.
“We have a real-time inventory. So if you order a book, I know immediately which of my partners stocks that book. We also stock titles in warehouses (located outside city limits, for cheaper real estate costs) and we have access to warehouse data of other distributors, as well.”
What’s more, an online bookstore enterprise can promise publishers sales in much higher volumes than a single bookstore, since consumers are spread across the country. Tradus.in’s Sethi says that it gets about 60% of its orders from cities that aren’t among the top 20. A key area where the Indian online bookstore market differs from the market globally is the immense popularity of the cash-on-delivery (COD) payment option. Uread.com’s Goel says, “In the US, for example, credit cards are far more popular, but in India people trust COD. We launched it last month on Uread.com and already it is responsible for about 70% of the transactions on our site.”
The popularity of online retailing is something even Crossword now wants to take advantage of. It currently doesn’t have an online shopping option on its website. “Online bookstores haven’t made much of a dent in our business, although they have slowed down growth in physical sales in certain categories, like bestsellers,” says Sivaraman Balakrishnan, manager-marketing, Crossword. “Consumers continue to shop for children’s books and merchandise at our stores, where touch-n-feel and visual delights are important.”
Retailers such as Crossword and Landmark say they don’t worry about the explosion in online retailing of books. Balakrishnan says, “We’re okay with the entry of new online bookstores or even physical stores, since it only increases our readership by giving more people access to books. The problem, however, is that the readership of books or the reading habit, is not proportionately growing.”
We are at The Oberoi in Bangalore and the previous night’s rain has brought to life the garden overlooking the lobby. It also seems to have energized the 28-year-old man I am sitting with.
Binny Bansal, COO and co-founder of Flipkart, initially comes across as shy and reserved. Clad in a T-shirt and a pair of denims, Bansal is far removed from the suit-and-tie image I had of the chief operating officer of a company whose 2010-11 turnover was Rs75 crore. But Bansal’s online retailing company is somewhat like him and its co-founder Sachin Bansal (not related to Binny)—there is more to the duo than their unassuming and low-profile public personae.
Kartwheels: Bansal says Flipkart has delivered to almost every pin code in India and ‘definitely every pin code in Kerala’. Jayachandran/Mint
Three and a half years into becoming one of India’s fastest growing e-commerce outfits, known particularly for books, Bansal cannot forget his company’s first customer. Or the way he delivered the goods for his first sale. “After two weeks of the launch, we left messages on a lot of blogs about Flipkart. One of those was on the blog of a Hyderabad-based person named V.V.K. Chandra. He came to our site searching for a book which he had been looking for for the last two years. It was Leaving Microsoft to Change the World by John Wood, and he placed the order. Next day, we went to several distributors in Bangalore, but most of them didn’t have it. Finally, we traced the book to a store in the Indiranagar area of Bangalore. I went there to pick up the book, then found out I didn’t have my wallet and called a friend who worked nearby to give me money. Then it started raining heavily. Somehow, we packed it and shipped it to the customer. We informed Chandra about the delay. He said he had waited for it for two-three years and could wait for three more days,” Bansal recalls.“We were clear from the beginning that the focus of our firm would be totally customer-oriented while having a strong technological base.” Since that first customer (who went to order at least 50 more books in the coming months), there has been no looking back. Both the Bansals did their software programming from the Indian Institute of Technology (IIT), Delhi. Before getting into the “technology of selling books”, Binny Bansal joined the US-based Sarnoff Corp., a firm that is into high-end automation projects for the defence and automobile industries, in Bangalore in 2005. In the year and a half he spent there, Bansal developed a lane sensor for cars—a mechanism enabling a camera in the car to detect road lanes. If the driver moved from one lane to the other without giving a signal, it would beep automatically. “There are lots of accidents in the West when people doze off on long drives and unconsciously move lanes. I was always into cool technology and working on this was fun.”
Today, Bansal has no qualms about being described as India’s Amazon.com. “Our vision was always to be the Amazon of India,” he says. Flipkart has around 10 millions books on its catalogue across different genres and is now moving into selling other products such as music and movie CDs, electronic goods, computers and peripherals. Every month it gets about six million visitors online.
Both the Bansals have worked for Amazon in the past. Sachin joined Amazon in January 2006, followed by Bansal in January 2007. Both quit in September 2007. “While at Amazon, we realized we should do something on our own since the scope for e-commerce was huge,” Bansal says, emphasizing: “I never wanted to go abroad unlike most IITians. I wanted to be in India but create something on the Internet using technology that we can create at home, hoard up and make millions of dollars.”
However, in late 2007, soon after the company’s launch, it still seemed a risk. “We were lucky since neither of us was married and didn’t have much family responsibility. Sachin and I put in Rs2.5 lakh each and started with seed money of Rs5 lakh.”
An important change took place around 2010: the payment mechanism. It’s a feature of Flipkart’s model that is distinct from Amazon’s.
“We looked at how Chinese companies—where e-commerce is huge—did retail online. The US has an established credit card culture, while China (like India) is a cash-based economy with lesser credit card penetration. So looking at e-commerce models in China, we put in place a cash-on-delivery system.” Today, more than 50% of their orders operate on a cash-on-delivery basis, Bansal says. Most importantly, on nearly each book a consumer buys through Flipkart, the price is “15-35%” cheaper than the cover price.
Though Bansal says Flipkart has transported books to “nearly every pin code in India, and definitely every pin code in Kerala”, 50% of their orders come from the metros: Mumbai, Bangalore, Delhi, Chennai, Kolkata and Hyderabad. The remaining buyers are from other parts of the country. Each day, Flipkart ships 1,000-odd items “through the government book post as so many villages don’t have courier facilities”. According to Bansal, the most saleable categories are fiction, trade paperbacks and Indian writers. More than 60% of Flipkart’s customers are working males between the ages of 25 and 35.
With the iPad and the Kindle, what is the future of books and booksellers such as Flipkart? Bansal thinks e-books are advantageous for outfits such as theirs. “It depends on which economies we speak of. In growth terms, India will be behind the West by four-five years when it comes to e-books. The projection for the US is that 50% of books will be e-books by 2015. In India, it will be by 2018 or 2020, not before that.” He says the demand for the normal paperback or hardcover is still high in India. “The e-format will dominate in India too, but not before the entire structure for it to take off has been set up,” he says.
The distribution model for e-books is online, so that’s a transition Bansal is waiting for.
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