Last year Flipkart became the first home-grown e-tailer to hit a gross merchandise value of $1 billion. It was also the year the company acquired online fashion store Myntra for an estimated $350 million. While its Big Billion Day sale, which notched up revenues of $100 million, left a few buyers disgruntled, investors continue to back Flipkart and have infused $1.9 billion in three rounds of funding. Flipkart co-founder and CEO Sachin Bansal tells FE’s Sayan Chakraborty & Darlington Jose Hector that the company plans to make strategic acquisitions in the technology and mobile segments to drive its innovation engine.
By Sayan Chakraborty and Darlington Jose Hector
What kind of R&D work is underway at Flipkart?
We are a technology company and we are constantly looking at innovations that can improve the e-commerce ecosystem. We are going to use data analytics very extensively this year to give us an advantage across mobile and the marketplace. Our commerce data, which help our sellers and brands decide their pricing and positioning strategy, is being used to work on personalised apps and transaction tools for SMEs. We would like to extend this intelligence to a broader market through various partnerships.
How does Flipkart plan to avert irregularities and glitches during mega sales?
The Big Billion Day, on which we saw 1.5 million people shop with us, was an online sale of a proportion that had not been attempted before and, naturally, we did not have a reference point. We had been focusing on building up our tech back-end so that we could support the expected scale and and overall we think we did a fairly good job. There were some problems that led to our customers having a less than satisfactory experience but we have also learnt from our mistakes.
This year we plan to strengthen our technology backbone so that we can easily handle massive amounts of traffic. We have already started working with sellers and brands to improve our demand predictive capabilities so that there are no inventory issues for the next mega sale. We are also investing in greater automation within our supply chain so that we can speed up our order-to-delivery process. We will continue to carry out extensive testing of our services prior to the sale to identify possible faults in the system, something we did last year as well.
Will Flipkart look at acquisitions in the technology space? What capabilities will you look for in a company?
A large internet company of our size has to take mergers and acquisitions very seriously. This year we have large plans for acqui-hires and strategic acquisitions and we want these M&As to drive our innovation engine. Myntra and Mime 360 have been successful acquisitions for us and we are looking at a lot of deals in the technology and mobile space.
There is a popular perception that online shopping will become a mobile phenomenon soon. How do you see this trend emerging and how is Flipkart gearing up to handle that shift?
We agree with that perception. The pace at which this medium is catching up with and even surpassing desktops is faster than what we have seen in the US or China, where the concept of mobile commerce has been around for longer. We had started following a ‘mobile first’ approach for a lot of our product and service launches for a while. We are working on further improving our mobile apps to cater to tier II and III users where Internet connections are slow or patchy. Of course, easy payment options like cash on delivery are also available on mobile, encouraging more first time online shoppers to adopt this platform.
How does expansive use of apps by consumers help e-tailers augment their tech capabilities and manage business better?
It opens up a world of tech-led opportunities given the medium of apps. Features like location, collaboration, image recognition and richness of data all lead to rethinking of core assumptions. Companies have to build technology to solve for network connectivity, latency and reliability fundamentally differently, which also affect how they solve for aspects like customer acquisition and distribution.
What percentage of Flipkart’s traffic comes from mobile phones and how is Flipkart working towards building a robust mobile platform?
We are looking at over 65% of our traffic coming from mobile, a huge leap from the single-digit figures we were seeing last year. But we had been expecting it and had started working towards a mobile-first platform pretty early on. Well-made mobile apps with personalisation and easy payment options like cash on delivery are making it easier to buy and sell via mobile devices and this is where we are focusing a lot of our efforts. With a huge amount of first-time Flipkart users coming to us exclusively through their mobiles, we are working to make sure that our app works well across low-speed and patchy 2G networks. Even as far as acquisitions are concerned, we are interested in start-ups that are working on interesting tech products in the mobile space.
Personalisation and product recommendation has emerged as a key focus for all e-commerce companies. How is Flipkart working towards strengthening this aspect?
E-commerce has moved from a small industry to one of the hottest businesses in India today. Naturally, that means there are a lot more players, all trying to grab the customer’s attention. That’s when the level of personalisation an e-commerce player offers becomes its differentiator. We think Flipkart has an edge here. We have what is easily the largest amount of commerce data in the country. This helps us predict customer behaviour much more accurately. What this means for the business is better product positioning, inventory that is optimally located, ability to predict seasonal supply-chain bottlenecks, all of which helps us to plan ahead and constantly improve on our offerings.
Despite e-tailers claiming to generate over 50% of their traffic through phones, why is there a tendency to promote app usage through special offers and discounts on apps? Do you still need these incentives to promote app usage?
Discounts are fairly commonplace in e-commerce as a whole. It’s not just a mobile focused trend. Given that apps are a newer experience as compared to desktops, discounts perhaps help in attracting that initial customer attention. After that, it’s all about the customer experience.
There is a popular perception that online shopping will become a mobile phenomenon soon. How do you see this trend emerging and how is Flipkart gearing up to handle that shift?
We agree with that perception. The pace at which this medium is catching up with and even surpassing desktops is faster than what we have seen in the US or China, where the concept of mobile commerce has been around for longer. We had started following a ‘mobile first’ approach for a lot of our product and service launches for a while. We are working on further improving our mobile apps to cater to tier II and III users where Internet connections are slow or patchy. Of course, easy payment options like cash on delivery are also available on mobile, encouraging more first time online shoppers to adopt this platform.
How does expansive use of apps by consumers help e-tailers augment their tech capabilities and manage business better?
It opens up a world of tech-led opportunities given the medium of apps. Features like location, collaboration, image recognition and richness of data all lead to rethinking of core assumptions. Companies have to build technology to solve for network connectivity, latency and reliability fundamentally differently, which also affect how they solve for aspects like customer acquisition and distribution.
What percentage of Flipkart’s traffic comes from mobile phones and how is Flipkart working towards building a robust mobile platform?
We are looking at over 65% of our traffic coming from mobile, a huge leap from the single-digit figures we were seeing last year. But we had been expecting it and had started working towards a mobile-first platform pretty early on. Well-made mobile apps with personalisation and easy payment options like cash on delivery are making it easier to buy and sell via mobile devices and this is where we are focusing a lot of our efforts. With a huge amount of first-time Flipkart users coming to us exclusively through their mobiles, we are working to make sure that our app works well across low-speed and patchy 2G networks. Even as far as acquisitions are concerned, we are interested in start-ups that are working on tech products in the mobile space.
Personalisation and product recommendation has emerged as a key focus for all e-commerce firms. How is Flipkart working towards strengthening this aspect?
E-commerce has moved from a small industry to one of the hottest businesses in India today. Naturally, that means there are a lot more players, all trying to grab the customer’s attention. That’s when the level of personalisation an e-commerce player offers becomes its differentiator. We think Flipkart has an edge here. We have what is easily the largest amount of commerce data in the country. This helps us predict customer behaviour much more accurately. What this means for the business is better product positioning, inventory that is optimally located, ability to predict seasonal supply-chain bottlenecks, all of which helps us to plan ahead and constantly improve on our offerings.
Despite e-tailers claiming to generate over 50% of their traffic through phones, why is there a tendency to promote app usage through special offers and discounts on apps? Do you still need these incentives to promote app usage?
Discounts are fairly commonplace in e-commerce as a whole. It’s not just a mobile focused trend. Given that apps are a newer experience as compared to desktops, discounts perhaps help in attracting that initial customer attention. After that, it’s all about the customer experience.