Flipkart ‘s aggressive outlook has already seen it become the largest online retailer in the country. Earlier this year, it beat its own projections by reaching $1 billion in sales and topped off a great start to the year with the acquisition of fashion e-tailer Myntra in May. With this week’s new funding of $1 billion, the sky seems to be the limit for the seven years old company and Flipkart’s founders—Sachin Bansal and Binny Bansal, have made it clear that they see themselves as the “mobile e-commerce company of the future”.
“Mobile commerce is going to be a focus area for us going forward - we foresee a lot of growth in this area. We believe mobile can only become a key growth driver if one can create tailor-made mobile interfaces for the end user and we intend to concentrate our energy on this,” said Sachin Bansal, who is also the CEO of the company. When quizzed whether the new investment would be used to fuel further inorganic growth, Bansal said, “The mobile space is ever evolving. We will be looking at some acquisitions in mobile applications and other technologies.”
The focus on mobile e-commerce is not without reason. With more than 200 million users accessing the internet through the mobile currently, a number expected to reach in excess of 500 million by 2018 according to Morgan Stanley, there is a huge market waiting to be explored.
Apart from mobile, Bansal said big data & analytics will be a key differentiator for the company and something that the company will spend money on. Giving an overview of where the company is heading, Bansal said that investments would be made in building technology platforms to enable sellers in selling online. Flipkart will also be expanding their product categories over the coming 12-18 months with new category launches in the pipeline across segments.
“We will also continue to expand the supply chain base. We wish to take Flipkart to the next level by pioneering technology and supply-chain innovations that will change the face of online shopping and one day make us one of the biggest Indian companies on the global map,” said Bansal.
In the press conference to announce the latest round of investment, Flipkart’s founders mentioned their dream of creating India’s first $100 billion internet company. That dream might still be some time away, for now let’s take a look at some of the key events in Flipkart’s journey in recent months:
Changing of business model
This round of funding brings the total amount of money raised by Flipkart over the years to around $1.75 billion. As FDI in online retail is not allowed in the country, Flipkart (like many others) follows a complex holding structure. Late last year, Flipkart was among a number of other e-commerce players who came under scrutiny by the Enforcement Directorate (ED) for allegedly violating FDI regulations. Though it is not clear what the result of that investigation is, last year, Flipkart had changed its business model—from being an online retail store it is now an online marketplace where different sellers can display their products. This means Flipkart does not hold any inventory on its own and is just responsible for delivery and the technology platform. Apart from the business benefits, it also meant that Flipkart got more leeway under the regulations on foreign funding.
Flyte digital store & exclusive launches
Flipkart has never been shy of trying something new. This was seen when they launched the Flyte digital music store in 2012. In the vein of iTunes and others, it offered a legal way to buy DRM-free music online. Unfortunately, the experiment did not work out in India, where the market for online paid content is still far from mature. The advent of free music streaming websites did not help matters either. Flyte was finally shut down in 2013.
Recently, we have seen an increasing trend of Flipkart offering its platform to brands for exclusive launches. These include the highly successful tie ups with brands like Motorola and the Chinese smartphone brand Xiaomi, which both launched a number of their models exclusively through Flipkart.
Rising trend of e-commerce players selling smartphones: David to brick & mortar Goliath?
It is no secret that Flipkart is highly inspired by Amazon’s business model. In fact, one could also go as far as to say that it has been replicating the US giant’s model over the years. In another move similar to Amazon, Flipkart, in July this year, launched its own range of in-house branded electronics. The products, which currently include tablets, computer accessories, speakers, headphones, earphones, gaming accessories, network routers, etc. are sold under the brand name DigiFlip