The concept of e-commerce is yet to attain a solid foothold in India, as compared to brick-and-mortar retailing. This is largely due to a number of factors, including the country’s low level of Internet penetration and the fact that Indians still remain sceptical about sharing their financial details online. However, one company that has successfully broken this barrier and achieved phenomenal success in recent years is Flipkart.
Headquartered in the country’s IT capital Bengaluru, flipkart.com was established in 2007 by Mr. Sachin Bansal and Mr. Binny Bansal, both IIT-Delhi graduates and former employees of global online retail giant Amazon. The initial idea was to create an online portal that will be able to provide a comparison of various e-commerce websites. Unfortunately, the Bansals quickly realised that there weren’t enough e-commerce websites to compare in India. This made them think of launching their own online shopping website, which led to the birth of flipkart.com.
Flipkart started by retailing only books online, which was part of a smart entrepreneurial strategy to gain the trust of its target audience. This was because books were relatively inexpensive items, which meant that more customers might be willing to make a one-time purchase and try the website’s services. Moreover, books can be easily sourced from publishers and can be easily packed and delivered. The strategy was a grand success, and the company is currently the undisputed leader of the country’s online book retail industry, with a commanding 80 percent market share.
One of the biggest factors that have contributed to Flipkart’s success is its ‘cash on delivery’ (COD) mode of payment. As Indians have traditionally remained wary of sharing their credit card or debit card details online and also want to touch and feel a product before actually purchasing it, flipkart.com’s COD payment mode has worked wonders for overall sales. Besides, the company has been able to cater to an entirely new and untapped customer segment through the COD payment mode. This segment includes those who are technologically backward or are not yet familiar with the idea of plastic money.
Apart from this, Flipkart’s ability to provide robust discounts, in view of its low overheads, is another major attraction for existing and new customers. The company has an extensive warehousing and distribution system across all major transit points, which enables it to deliver products on time and ensure customer satisfaction.
Having started with just two employees, flipkart.com now employs over 4500 people, and hopes to touch a revenue figure of INR 4500 crore by 2015. Over the years, the company has branched out into sales of 12 product categories that include mobiles and tablets, cameras, computers, clothing and footwear, apart from books. Initially started with a modest cash award of INR 4 lakh, which was part of the combined savings of its co-founders, this widely popular e-commerce company has already undergone four rounds of venture capital funding.
With Internet penetration in India, especially in tier II and tier III cities, on the rise, it should spell long-term success for an e-commerce venture like Flipkart.