Flipkart needs innovation but capital to take on Amazon

BENGALURU: Binny Bansal , CEO of Flipkart , took over the reins at the country's largest online commerce firm around four months back amid unbridled competition from Amazon . Never known to be the face of Flipkart — that role was played by his co-founder and erstwhile CEO Sachin Bansal — the 33-year-old is only just beginning to warm up to his public role as the company's chief.

In his first interaction with the media since being elevated, Binny dismissed the clear and present threat of the American e-commerce behemoth's rising market share, and instead said he was happy with the progress made by Flipkart in the past year on all counts, including cutting its burn rate. With four areas of focus charted out — commerce, supply chain, advertising and payments — Binny's mandate is to go back to the basics with all efforts directed towards improving customer experience. Excerpts from an interview...

how have the last four months panned out for Flipkart amid valuation markdowns, top-level organizational churn, and competition inching up its market share?

I've spent three to four months closely looking at the business and have seen what the media has written about valuation and market shares. But in all of this, we've missed the big picture. There's no scale player in retail — this is true even in supply chain and logistics. Our aim is to transform commerce through technology. And now we are going back to basics and looking to improve the overall customer experience that we already have.

When you talk about commerce, you've largely focused only on mobile phone sales and fashion. What's the plan going forward?

Large appliances are a big opportunity. We had it previously, but went back to the drawing board to improve the customer experience. So we shut it down and built a new supply chain before relaunching.

What were the things you didn't do right and are looking to correct?

My focus is on where we are and what we need to do. Our app-only strategy was absolutely right, you can't look at everything in hindsight and say it's right or wrong. But there are learnings like a bunch of customers who still prefer to shop on desktops and people who don't want multiple apps on their phones.

How real is the Amazon threat?

We don't think about it that much. We're focused on growing the market. We're very small compared to where the market is and most of the story is ahead of us. Whatever place we are in today is that of a starting point and I don't see it as an ending point.

Did you slip up and let Amazon take advantage over the last year?

Again, I would look at the last eight years of the company and not a year or year-and-a half. In the last eight years, we have created a brand in India.

They (Amazon) seem to have done fairly well in a short period...

Look at any brand survey, Flipkart is ahead of anybody else. This is all perception and you need to look at data. I'm fairly bullish about where this will go and our future prospects.

Amazon has been pumping in a slug of money (Rs 6,700 crore so far) while you've found it tough to raise capital at the present valuation...

Capital is the last thing which is needed to ward off Amazon or whoever. As a market, it's huge and there's so much room for innovation. I think it's a narrow view to look at it like we've to fight Amazon or somebody who is coming in with money. We have raised so much capital and we can create a huge business with this amount of cash.

Are you looking at a strategic investor like Alibaba?

We are not looking at an investor right now. We have enough money to build the company.

How have the markdowns affected your prospects of raising fresh capital at the $15-billion valuation tag?

Most of these investors own less than half a percent in Flipkart. It's a theoretical exercise — this is not a public market company. In private market, share prices only move up and down when the company raises money and we haven't done that.

Can you give us your take on the new FDI policy on online marketplaces?

Overall, the policy paper is useful from a clarity point of view instead of it being there in multiple places. Changes you talked about like a cap of 25% of sales from one seller doesn't impact us at all as we are fairly distributed among our merchants.

Have you missed the IPO bus?

We always talk to bankers and investors. We have been talking to bankers since 2011, so we have been missing the bus since 2011 (laughs). You need to ask Sachin. My personal focus is improving experience and scaling up the business. We will do it at the right time. IPO is not the biggest thing on our minds.

Till recently, all e-commerce firms were GMV-focused and now everyone is talking about returning customers...

At Flipkart from day one, our most important metric has been Net Promoter Score, or NPS, rather than GMV. There are 50-60 million consumers buying online today which is huge customer base. I think given the large base, it makes sense to ensure you are selling more to the same customers as that opportunity is big enough compared to three years back.

source: techgig