I have been a loyal Flipkart customer since it started shop selling books. I loved the experience – it worked all the time. they exceeded expectations in delivering , refunding , the call centre picked up the phone in 2 rings – I love them and have strongly endorsed them over the last 7 years. Not only have they helped themselves but the country. As the harbinger of the eTailing revolution in India they have helped the country and the consumer.
Today a person in a remote location has access to products that he could not shop for in the past. Look at how the country has saved with Zillions of products being sold online – we have saved so much petrol, electricity , traffic congestion in our already crowded markets and malls.
But I worry if Flipkart will survive in the near future. Here are 5 Reasons on why they may struggle.
1. History has not been kind to Indian Companies. Nirulas the pioneer in fast food business collapsed when McDonalds came to India. Thumbs Up succumbed to Coke & Pepsi. Pizza Corner has almost wound up as Pizza Hut and Dominoes continue their mad growth. Mad over Donuts stands no chance against Krispy Creme or Dunkin Donuts. CCD that ruled the length and breath of the country is slowly but surely collapsing in front of Starbucks and Costa Coffee…. the list is long but the ending is similar in every case. The Global Multinational rules and the Indian upstart bites dust from a position of leadership.
2. Indian companies rarely go Global. When Amazon started within a few years they were in numerous countries – US, Canada, almost all of Europe, Australia , Singapore …….. . Flipkart has been around for 7 years , they currently have a run rate in excess of 3B / year – yet they operate only in India. WHY ? Is this being content with growth in India , lack of global expertise , or the desire to sweat it out till you have a massive IPO and then cash out.
3. Most Indian companies have the IPO syndrome – post the IPO – the quality / service all starts dropping rapidly. The founders and investors make so much money and there is so much joy and glee that the desire for enterprise building starts dropping. We have seen this often – Club Mahindra, Meru, Sobha .. all dropped on the service front after their IPO. Is this a case of Indian new age entrepreneurs being Sprinters Vs Marathon runners! With the Flipkart IPO around the corner ( Post the success of Alibaba) – I just hope this does not turn out to be true.
4. Obsessed with Competeition. A quote from Jeff Bezos on his recent visit to India said it all – “Usually companies are worrying and obsessing about competition when they should actually be worrying and obsessing about customers. Our first priority has always been customers, and we are not worried about competition,” Bezos said at an event organised by the Federation of Chambers of Commerce and Industry (FICCI) in association with Amazon.
The last 6 months Flipkart management has been taking a lot of potshots at Amazon, when their Global CEO was in town they took hoardings all the way from the airport putting up spunky taunting comments. Was this necessary?
5. Oct 6th, Flopkart – What I experienced, what my fiends told me and what I read on the Social Media all indicated that Oct 6th was indeed a Flopkart. Was this necessary? Did it help the Brand or hurt it.
The founders claim success
“Our teams and sellers worked days and nights to make this sale a success — and our efforts paid off. We got a billion hits on our site and achieved our 24-hour sales target of $100 mn in gross merchandise value (GMV) in just 10 hours,” the Bansals said in a statement.
Lets do the math – there are about 20M Broad Band HH in India and an additional 25 M 3G users. Even if we assume a 50% overlap between the two – thats about 30 – 35 M people who can access the Internet ( I am excluding Edge customers because the 3G speed on Mobile in India is so slow there is no way you can do online purchase on 2G) . I am not assuming that all of them were waiting to visit Flipkart on Oct 6th – lets take an optimistic number and say 50% were – To get a Billion hits how many times would these 15M people have visited the site – about 60 times each, that doesn’t sound feasible at all.
India is a country with a population of 1.2B – if there are 200M kids below the age of 10 – are we saying that every adult in the country visited the site once OR 500 Mn people visited it twice on Oct 6th – Sounds highly improbable given that we have an installed base of less than 50Mn PC’s and only 28% of the phones in the country are SmartPhones.
Even the figure of $100 M sale in 1 day does sound hyperbolic. I wish there was some mechanism to audit this data.
I am proud of Flipkart and the dynamic young founders who have made history – I just hope they beat the odds and history and continue to maintain their fantastic growth trajectory and sustain the revolution they have started in India. Like many I am a strong believer that we are seeing Chapter 1 of the eTailing business in India. In telecom we missed the Land Line bus and jumped to Mobile, similarly on retailing we are all set to move from Mom & Po General Trade to eTailing by skipping the Organised Trade bandwagon.
Lets hope that this time Flipkart leads the pack and not Amazon