Flipkart - A giant in the making
Flipkart went live in 2007 with the objective of making books easily available to anyone who had internet access. Today, they’re present across various categories including movies, music, games, mobiles, cameras, computers, healthcare and personal products, home appliances and electronics, stationery, perfumes, toys, apparels, shoes – and still counting!. Wow sounds an impressive list but reaching this far wasn't easy. As a matter of fact Flipkart and its investors at this stage are seemingly losing money. They pulled out of large electronics items as customer experience was not up to the mark. Their logic was simple if they can’t offer customer a delightful experience they will not do it. Moreover, their online music store Flyte Music was shut down a little over a year after launching it. In the words Sachin Bansal, CEO of Flipkart - Flyte didn’t offer a potential for massive business. Statistics showed that Flipkart’s music CD section attracted only 1/6th of the traffic but its revenue was 3 times that of digital downloads (pay per download). It churns out a skewed ratio of 18:1 in favor of music CD’s. Digital music is not happening in India right now, it's a niche business. Flipkart realized that customer is against this model and dropped Flyte. Flipkart have always had this experimental temperament about its business and they’ll keep on improvising as a startup is not built to be small, it has to grow big.
However, in the long run it’ll be a different story as E commerce in India has just reached less than 1/10th of its potential. Out of 120 Crore Indian population not more than 1.5 crores use E Commerce frequently. Looking at burgeoning internet users the market should reach at least 15 crore users by 2015. At this stage, as long as they keep getting venture capitalist money they should continue soaking losses if their transaction volume and user base keeps expanding. This year Flipkart clinched a funding of $360mn, the largest-ever funding for internet business in India. With fresh funding, Flipkart now has the impetus to realize its expansion plans.
Answering the question whether Flipkart is a giant in the making is a tricky one. Recently, Alibaba Group Holding Ltd., China’s largest e-commerce company has been valued by analysts at as much as $190 billion (Flipkart valued at $1.5billion), compared with Facebook's $104 billion valuation after its market debut. Alibaba, is now considering a U.S. listing after talks with Hong Kong’s stock exchange fell apart. Amazon, the Global leader in...