Flipkart #3: The Good and the Bad

In 2011, Flipkart introduced another inspired move: customers could return a product within 30 days. Until then reluctant folks came to Flipkart in great numbers driving sales even further, writes Mihir Dalal in The Big Billion Startup.

 

In further rounds of investments, new investors didn’t feel the accounts were clear. The company had grown too fast to track such things clearly. It was a very dangerous time for Flipkart. Worse, Amazon had (re)entered India. Fixel, the biggest investor in Flipkart, was in a bind. If others weren’t willing to invest, his investment would go down the drain. And so he sent in his man, Kalyan Krishnamurthy, as interim CFO (Chief Financial Officer).

 

Remember that shady arrangement Flipkart had come up with to stock up on items to follow the letter but not the spirit of the law? The government started an inquiry into it. Sachin was sucked into that matter, and Kalyan started stepping into the vacuum thus created.

 

Under Sachin and Binny, Flipkart was a tech company first, retailer second. Kalyan felt this approach made no sense. The clashes started to increase. And there was no denying that Kalyan’s focus was transforming the company into a ruthlessly efficient company. But the relations between the top guys was increasingly toxic.

 

Flipkart went and bought Myntra. Clothes/fashion was a segment where Flipkart was already doing well, it had high profit margins, and it was an area Amazon was weak at anyway. A couple of years later, they bought Jabong too.

 

Sachin came up with the idea of a huge sale for Diwali in 2014: it came to be called the Big Billion Day. Heavy discounts were announced. The demand far exceeded their wildest dreams; but their systems couldn’t cope and crashed, customers couldn’t place orders, items were sold out before one could try to pay.

 

Sachin had grand visions. Flipkart should become a platform, a site where others could sell their goods while Flipkart took a commission. He also felt Indians would shop mostly on their smartphones (long before smartphones became ubiquitous), so he wanted an app developed. Strangely, he wanted to kill the website and only support the app. Many questioned the idea. He also wanted Flipkart to become an advertising platform – why should Google and Facebook get all the ad money, he reasoned. He also decided to wind down sales of books and laptops. Focus on smartphones, that’s the future, he said. Flipkart went and bought PhonePe – they felt mobile payments would be the next big thing. Someday. They bought it when it didn’t even have a working proto! The founders were engineers and technologists at heart, and it showed.

 

Sachin seemed to be building for the future, but someone had to care about the present too…

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