We are streets ahead of the competition: Flipkart

K Giriprakash Sangeetha Chengappa Bengaluru | Updated on January 16, 2018

Binny Bansal, Group CEO, Flipkart

CEO talks about top-level exits, the shape of the e-commerce market, and the company’s plans to better its rivals

Over the past one year, India’s largest e-commerce company Flipkart has been facing major challenges — there have been top-level exits, and there has been stiff competition in the e-tailing space. In an interview with Businessline, Flipkart’s Group CEO Binny Bansal shared the company’s plans to navigate through its toughest phase so far.

How difficult was it for you to reconcile to the fact that you were asked to take over the role from your co-founder and friend, Sachin Bansal?

Let me give you some context. Sachin and I, at the end of every year, do our regular annual evaluation session. We talk to each other about a host of issues ranging from what worked for us and what didn’t.

This year, however, along with the evaluation of our performances, we also evaluated our respective strengths. After a lot of deliberation, both of us decided to take this decision of me becoming the CEO, considering the need of the company at the moment, and told the board about the decision.

Obviously, the change got a lot of challenges along with it as well, but we have a vision in mind to make quality shopping affordable and accessible for millions of Indians online and I am super charged for this.

The reason for changes at Flipkart’s top management has been well chronicled but what lessons have been learnt and how do you plan to go forward?

There have been some exits owing to personal reasons but they are part of the journey of all organisations. But one thing I can confidently say is that we have the best talent not only in the e-commerce industry but across all sectors. It is a good mix of global and homegrown talent, including people who have grown with Flipkart internally.

If there is a team in India that can deliver our vision and goal of transforming commerce in India and to make the lives of people in India better, it is this team.

Reports suggest that you are losing ground to your nearest competitor on a month-on-month basis. Apparently, gross sales or the gross merchandise value (GMV) of your nearest competitor has grown more than yours. What could be the reasons...or is it actually true?

Actually, all recent reports have only confirmed Flipkart’s market leadership. We are streets ahead of the competition. The Bank of America Merrill Lynch Report released in September 2016 said Flipkart continues to be number one with over 43 per cent market share. The report also added that by 2019, Flipkart will continue to lead with a 44 per cent share of the e-commerce market. We have seen that our competition in India has done nothing to grow the market. It is very important for us to have a razor sharp focus on our customers. If we focus on competition, we will have a narrow vision of the business. More cash can get you market share but not lead to market growth.

The Big Billion Day (BBD) sale will be perhaps your biggest event during the calendar year. How well prepared is Flipkart? Will the outcome of this decide who leads the pack in the Indian e-commerce space?

What we have done this time is do a lot of work on the consumer experience side. We are making sure that we deliver higher value shipments much faster. We have also brought down the cost of executing this. We have also built tech and platforms which help us hire and deploy a lot of temp workforce for this event. As part of that, even the delivery time will be brought down from 8 to 10 days to five-six days for this period. So, what the BBD does is that a lot of work we do for the entire year gets tested. It basically moves the whole ecosystem forward. That is the significance of the BBD and it is not just about the GMV numbers. The scale which we deliver this time will become business as usual for the next 18 months. That is why it is an important event.

To one of our queries, Flipkart said that most of the cash it has raised is still in the bank. Can you explain that? So after acquisitions, and then the cash burn, how many more years can the current ‘cash-in-the-bank’ last?

Over the past few years, we have been successful in raising more than $3 billion. And we have sufficient funds for the next few years. Our biggest challenge is to grow the market from about 2 per cent of the retail market to 10 per cent in a few more years. As we scale our business, our profitability is going up.

Do you plan to progressively reduce the cash burn? What would be the comfortable cash burn per month?

Driving operational and cost efficiencies is a constant process that we focus on. Overall, as a business, we are very focused on expanding the market by continuously innovating for our customers. As we gain more scale, the cost of innovation and the cost of doing business is coming down rapidly. For a business like Flipkart, both scale and cost of business coming down actually go hand-in-hand.

Published on September 22, 2016

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