Flipkart #2: Everything's so Hard

Soon Flipkart needed money, writes Mihir Dalal in The Big Billion Startup. Banks, of course, were out of the question. There weren’t many venture capitalists back then; and they didn’t invest easily. It was a different era. Would e-commerce even work in India? How many people even had an Internet connection? Or a credit card? What did two engineers even know about running logistics? And so the nay-sayers list went on and on. In frustration, the Bansals considered selling off Flipkart to Infibeam. The deal fell through at the last minute. It would prove to be like that time when Yahoo almost bought Google.

 

And then in 2009, Accel agreed to invest $1 million, but in batches. A desperate Flipkart agreed. As Flipkart began to grow with this new money, they caught the attention of Lee Fixel, an American venture capitalist. Within forty days, his fund, Tiger Global, agreed to invest $9 million. At one shot. Sachin and Binny were ecstatic – from dangerously close to running out of money, they now had gotten almost $10 million in record time.

 

As Flipkart now tried to move into online segments other than books, they learnt the hard way that every segment was different – mobile phones was a different market altogether. You stood to lose a lot more via a phone than a book. Phone distributors didn’t want to tie into some new area like e-commerce – what commerce? And they’d never heard of this company anyway – Flip what?

 

As Flipkart soldiered on, their orders and sales increased. But this raised new problems – delivery. Courier companies were proving unreliable. Sometimes they would lose things; at others, they couldn’t handle a spike in orders.

 

In 2010, Flipkart introduced its “biggest expansive force”: cash on delivery. It drew more buyers to the site for two reasons – (1) they didn’t have to worry about paying and never receiving the good; and (2) they didn’t need to have a credit card to shop. But this feature also raised more problems – the couriers stole the money at times; and the courier companies would delay handing over the money to Flipkart. All this forced Flipkart’s next move:

“Flipkart would have to launch its own logistics service.”

While logistics was a new field for the company, success in it would mean it could track orders better; and customers could “see” the status of the order.

 

Suddenly, investors were flocking to Flipkart’s door. Its value soon shot up to $200 million, making it one of the most valuable startups in India. And now it ran into new problems. At this size, it needed to store items beforehand. But that was illegal by Indian law, a historical legacy from the pre-Internet age. Flipkart’s legal team found a workaround to meet the letter but not the spirit of the law.

 

Things are so much easier today; but back then:

“Flipkart was building the road and walking on it at the same time.”

Comments

Post a Comment

Popular posts from this blog

Student of the Year

Image
As a toddler, my daughter loved Alia Bhatt’s songs, esp. the ones from Student of the Year . (That movie did have many good songs and well-choreographed dances). Fast forward to present day, when she is 12 yo. She rarely watches Hindi movies now, but one of the few ones she likes of late, Raja aur Rani ki Prem Kahani has, yes, Alia Bhatt.   If I had any hopes that there was anything to be read in the name of her toddler-time favorite ( Student of the Year ), they have been dashed. Our conversations come exam time are perfectly captured by this photo and its caption: In fact, the pic below captures how she and I look at her answer sheets – me intently, she with an expression of “It’s over, so why are you even looking at it?”   Of late, we pull her leg and tell her that she isn’t showing any signs of academic prowess, she’d better find a rich guy to marry. Some time later, she showed us this meme on the Internet: “Me No Study, Me No Care Me Go Marry Millionaire If He Die
Read more

Animal Senses #7: Touch and Remote Touch

Instinctively, we think touch is based on contact. Not entirely true, explains Ed Yong in Immense World – there’s a more important aspect than contact: “These incredible feats are possible through movement. If you rest a fingertip upon a surface, you can get only a limited idea of its features. But as soon you’re allowed to move, everything changes. Hardness becomes apparent with a press. Textures resolve at a stroke.” As you run your fingers over a surface, they hit the tiny peaks and troughs and set off vibrations in the mechanoreceptors at their tips.   At the tip of its snout, the star-nosed mole has many pairs of hairless appendages. It uses them to touch things around itself. Alive or dead? Food or ignore? It does these movements at an insane speed. In the time it takes to blink our eyes, the star-nosed mole can probe, identify and swallow its food. “Light may be the fastest thing in the universe, but light sensors have their limits, and the star-nosed mole’s sense of
Read more

The Retort of the "Luxury Person"

Image
Coming up with biting and witty retorts. It’s something we dream of, but rarely manage to pull off. Worse, the more we stew over the offending remark, the more likely we are to come up with that dream retort, as Calvin ruefully points out: During our last holiday at the Taj Resort, seeing my wife carrying towels to our poolside chairs, one of the kids there mistook her for a member of the staff and asked for a towel. When my wife narrated this to us, I did not imagine that my 8 yo daughter would come up with her own retort. But a day later, my daughter recapped the incident, an incident that didn’t even involve her in the first place , and said, “You know what I’d have told that kid who asked for the towel?”. And without waiting for an answer, she told us anyway: “I don’t work here. I too am a luxury person who is living at this resort. Go get your own towel.” We were highly amused by the phrase she had coined: “luxury person”. It certainly captures the kind of holid
Read more