Business

Meet Flipkart, the story of India’s homegrown answer to Amazon

By Oliver Smith 11 January 2017
Sachin and Binny Bansal, co-founders of Flipkart.
Summary

Welcome to the world’s sixth largest online marketplace.

If you’ve never been to India, you’ve probably never hear of retail giant Flipkart, but you should know about it.

Flipkart is the biggest online retailer for the world’s second most populous country, India.

Just like how Alibaba dominates in China, for India’s 1.2bn citizens, Flipkart is the place to shop online.

From electronics to dishwashers, children’s shoes to home furniture, Flipkart sells more than $1.5bn worth of goods every year and by some measures is the sixth largest online retailer in the world.

If you’re thinking this all sounds remarkably similar to another online giant, Amazon, that’s maybe not a surprise, especially when you discover both of Flipkart’s founders used to work there…

The Amazon connection

In 2006 Binny Bansal and Sachin Bansal (who are unrelated), joined Amazon as software engineers based in India, a country where Amazon had yet to launch.

Just a year later – after seeing the opportunity that Amazon had missed by dismissing the emerging Indian e-commerce market at the time – Binny and Sachin, 25 and 26 years old at the time, both quit Amazon to start Flipkart.

From day one Flipkart was tailor-built to serve the Indian market – just like how Alibaba was built to serve the nuances of buying and selling in China. For instance Flipkart offered cash on delivery payments, crucial in a country where debit cards and bank accounts are in short supply.

The business had humble origins, starting from Sachin and Binny’s apartment where they sold books online and packaged everything by hand.

Sachin in 2009, boxing Dan Brown's The Lost Symbol by hand when Flipkart was still operating from the duo's apartment.

“Because our volumes were very low, our courier partners would sometimes refuse to pick up items from our apartment,” said Sachin told the New York Times in 2011.

“So we used to get on a motorbike, hold the shipment in our hands and personally deliver them to our Bangalore clients.”

But the business was a hit, and by 2013 Flipkart had dominated almost 40% of India’s online shopping, having become the de facto ‘Amazon of India’.

Today cash on delivery, a practice alien to western shoppers that Sachin and Binny pioneered, is responsible for 75% of all online orders in India.

Fight back

But Binny and Sachin’s Amazon connection would come back to haunt them. In 2013 the US retail giant finally got its act together and launched across India.

Unfortunately at the time Flipkart faced problems of its own.

Binny and Sachin had struggled to raise enough money in 2012 to continue Flipkart’s expansion to sell across India, and over the next few years the duo would get stuck in a heated pricing war with their then biggest local rival.

All this played straight into Amazon’s hands, letting them plough billions of dollars of investment into the country and helping it steal 21% of India’s online shopping market.

Today Flipkart is still in trouble.

Trouble brewing

Just yesterday Flipkart changed its CEO for the third time in 12 months, both Binny and Sachin have stepped aside from the role after failing to turn Flipkart’s fortunes around.

And after being valued at over $15bn at its peak in 2011, Flipkart’s latest funding put a value of just $5.5bn on the company.

Amazon mean while continues to expand across India.

A decade after Binny and Sachin left the world’s biggest online retail giant to start Flipkart, it might seem like karma that Amazon has returned to enact some vengeance.

But for the duo who went from selling books in their apartment, to building the world’s sixth largest online retailer, there’s still time in the fight.