Flipkart’s Speaking..

Flipkart – a name that doesn’t need an introduction among who shop books online in India. Almost every other article here in pustakam.net ends with a option to buy the book from Flipkart. And why do we do that? Because, buying books online has never been so hassle-free, yet easy before. There’s a whole world of books waiting to become yours, you search and select a few, pay the money (through the safest modes) and the almost no-nonsense approach of the shipping process lets you have your book without having to wait much. Try it out, if you’ve not already.

A brainchild of two IIT graduates, flipkart is going places and making news, all set to be the best in the e-commerce portals. Here is the email interview with the chiefs of Flipkart, answering our queries. We thank the team for letting us have this opportunity to know them better and wish them all the very best in their further endeavours.

Flipkart – how and when did it all start?

After IIT, both of us started working for IT firms but we wanted to start something of our own. After working for some years, we gained some knowledge of the E-commerce market and decided to look at the opportunity of starting an online venture. Initially our idea was to create a comparison shopping website but our analysis showed that although there many e-commerce website, the quality of service provided them were not good. Therefore, we reconsidered our business idea and decided to start an e-commerce portal. We decided to start with books because the low price of the category induce customer trials and the market size for books was huge. Moreover, in this category, the initial investment was not very high and logistics did not pose a big problem. That is how, Flipkart was born.

What were the major challenges involved in getting this site up and running?

There were many challenges involved. The major challenge was developing partnerships. We had to partner banks, suppliers, dealers and courier services. It was a challenge to make them believe that we will add value to their businesses as our idea was not new and it was our first venture. We also had problems with payment gateways. Inventory was another challenge as we started by using our own funds. However, our idea was to not let a customer go by because he did not find a book. After getting orders, we would go to bookstores, buy the book, pack it ourselves and courier it. However, our above 50 percent repeat purchase rates show that our efforts have paid off.

What kind of background do the entrepreneurs of Flipkart had?

Mr. Sachin Bansal, CEO, Flipkart.com

Sachin Bansal, 28, originally from Chandigarh, is the co-founder and Chief Executive Officer (CEO) of Flipkart.com. An IIT Delhi Graduate from the 2005 batch, Sachin started his career at Techspan, a systems-integration and consulting firm delivering business and IT solutions. In 2006 he moved to Amazon.com, after realizing that his interests lay in developing software products. He was later joined by Binny Bansal, a long time friend, also from Chandigarh.

Mr. Binny Bansal, Co-founder and COO, Flipkart.com

Binny Bansal, 27, originally from Chandigarh, is the co-founder and COO – Sales and Operations, of Flipkart.com. An IIT Delhi (Computer Science) Graduate from the 2005 batch, Binny started his career at Sarnoff India, working on US Defence Projects, where he worked for 18 months. He then moved to Amazon.com, where he realized his interest in e-commerce and the scope for it in the country.

In 2007, Binny along with long time friend and associate, Sachin Bansal, started Flipkart.com, to retail books. Together they have taken Flipkart from a start-up to being the country’s largest online bookstore in a matter of two years. The company has grown ten times over the last one year and they aim to touch the Rs 100 crore mark by March 2011.

Why “book selling” amidst plethora of other business opportunities?

We got into book selling because the category is not touch and feel dependent. This removes the barriers that an online shopping portal faces. Moreover, since ‘books’ is a low cost category, the chances of people trying out a new service is high as the risk factor is low.

What are your thoughts on readership in India?

The book market in India is pegged at Rs 10,000 crore of which 1% is being bought online. The online segment is growing at 50% year on year and secure online payment models are helping in this regard. With branded on-ground book stores being limited to metros and big cities, online book stores have helped in considerably enhancing distribution of books to even smaller towns and villages across the country. Some of the interesting observations by Flipkart on the latest trends in online book purchasing, in India have been mentioned below:

According to data collected, we have observed that in the fiction category it is not the expensive ‘big title’ books that are driving the Indian reading bandwagon, but the humble low priced ones that have increased the market size by opening up reading to an entirely new class of customers. The low prices have made fiction reach into the hands of tier 2 and tier 3 customers, for whom the avenues for buying quality books were limited till now. Also, in non-fiction segment, the regular contributing categories like business and management have shown stagnation while categories like health / yoga and self help, have shown a sharp increase.

While bargain, bestsellers and new arrivals contribute largely to a brick and mortar store [up to 60%], the same cannot be said for an online store. The huge range offered by an online store brings in a long tail effect. Similarly other services like international sourcing for customers within a promised time, and availability of academic books at competitive prices, also change the sales mix.

Generally for a brick and mortar store, 30% of the sales would come from the front of the store displays. Same is not so in the case of an online store. Similarly majority of the customers walking into a brick and mortar store are not sure of what they are going to buy, while majority of customers who come to an online store (in this case, Flipkart.com) have a general idea of what they are looking for.

Flipkart would also like to points out that online book stores have their own seasonality effect. With the start of academic year, the sale for technical books, computer books and others jump ahead. During Christmas and holiday seasons too the order pattern changes to reflect more of fiction and activity books for children and young adult sections.

Flipkart attributes this to the lack of literature groups and book clubs in the country, because of which the reader remains aloof from other readers and therefore, exchanging views and broadening of the reading spectrum becomes a tough task. Another area where India is significantly different from the Global markets is the Audio books. Globally because of CD players being in every car, the habit of listening to books on the way to office has picked up, which is yet to be seen in India.

Why / How is the choice of name – “Flipkart”?

We were looking for a neutral name that has a good recall. The word ‘Kart’ refers to a shopping kart and is a common terminology while buying products online. Kart also signifies e-commerce. The word ‘Flip’ means searching from a variety of things. We combined the two and decided to name our website ‘Flipkart’. The name is easy to pronounce, easy to remember and conveys what we stand for.

Online shopping always runs the risk of credit card misuse and uncertainty about condition of the product received. In Flipkart, how do you tackle these two – the security of online transactions and shipping of books to satisfaction of customers?

One of the primary reasons for low levels of e-commerce transactions in markets like India is that – even among customers who have cards and or have access to services like net banking, there is great reluctance to use such facilities for online payments because of fears of security of data and transactions. The ‘Cash on Delivery’ option by Flipkart at once opens up our wide-choice of four million titles to anyone and everyone who has interest in books and has access to internet. While it will help significantly add numbers to customer categories like students, homemakers, etc, what this facility also does is it add greatly to new geographies, to include more buyers from smaller cities and towns that are very low on card penetration

Flipkart will thus address the needs of completely new strata of customers who did not so far have the opportunity of reading their choice of books because of high costs and less variety available in brick and mortar stores and lack of convenient payment options in online stores. Flipkart’s online payment gateways are also extremely secure.

Why do you think a customer should approach an online store instead of a book store?

There are various reasons for it. In a category like books, the ability to touch and feel is not that important. What matters the most is the availability of books as a customer does not likes to go back empty handed once he enters a store. An online book store solves this problem of low variety and also delivers it right at your own place in a specified time. Moreover, you can read reviews, find similar books, select from a wide range and search easily to get what you want.

How tough was it to gain the trust of customers initially?

It is tough to gain the trust of the customers initially as you have no offline presence and the shop does not have a face and personality. It is when the early innovators take risk and start buying that the service, personality and trust of the customers starts to build. We are lucky to have customers who really like our services and recommended them to their friends and acquaintances online and at other places. That is how more people came to know about us and the Flipkart family started to grow.

What were the campaigning modes used to take Flipkart to the people?

The best part about Flipkart is that we have achieved the number one position without any advertising. Our growth is completely based on the online and offline recommendations of our customers. Word of Mouth or viral publicity is what has helped us grow this big. We started out by asking friends and family to tell their acquaintances about us and then the word spread like a chain reaction because our customers experienced our superior services.

Flipkart doesn’t seem to have any stocks at their offices. Seems like flipkart chooses to be purely online store?

We do not feel that in the categories that we deal in, having an offline presence will add value. We feel that we can serve our customers very well by being a purely online store as it allows us to operate at lower costs, achieve a large customer base, reduce costs and deliver more value to our customers.

How soon can a newly released book be available in flipkart?

Almost immediately.

From being the “first ever online book store in India” – what are you future goals?

We have recently launched new categories like CDs and DVDs of music, movies and games. We currently have around 30,000 movie titles and 12000 music titles and games for Xbox, Wii, PS, PS2, PS3 and others. We plan to foray into selling software soon. Our goal is to achieve the same success that we achieved in books, in all other categories that we foray in. Also, we plan to add new categories in time.

Are there any chances for regional language books to appear in your store?

Flipkart already retails regional language books in languages like Hindi, Marathi, Punjabi, Tamil etc. We are continuously working towards expanding the variety by adding new titles regularly.

What’s the size of the team that works for Flipkart?

Currently, the team Flipkart is 200 people strong. However, we are hiring regularly as we are growing rapidly.

How is your customer base across India? Can it be assumed that the metros and net savvy cities have more customers to Flipkart than others?

Flipkart’s customer base is spread across the country with customers from all regions buying books from Flipkart. In fact, customers from Tier 2 and Tier 3 cities are most benefited by our services as they get a very wide collection of books which is not available in their cities.

How do you plan to extend your services to the remotest parts of India?

Our services do not have restrictions depending on geographical locations; any place in the country with internet access will be able shop on Flipkart. Those who do not have access to facilities like credit cards and net banking, but are book buyers will now be able to buy books online through COD. The Cash on Delivery facility is currently available in 29 cities (tier-1 cities and metros), and will shortly be extended to tier-2 and tier-3 cities as well. Also, Flipkart has tie-ups with Indian Postal service to be able to reach the remotest of villages that do not have courier services.

What is the market size of online book stores in India and what’s Flipkart’s share in it?

The market size of online book stores in India is around Rs. 100 crores and in just 2 years Flipkart has become the largest online Indian bookstore by acquiring 25 percent of it.

What are the reasons to limit shipping only in India? There was a case where you had the book (Kargil by Gen. V.P Malik), which isn’t available on other online stores, but you guys don’t ship it abroad.

Currently, we have limited our area of function to India, as we understand the business of books in India well. We also have logistic advantages to deliver books in India. While we do accept orders from outside India for delivery in India, but delivering books outside India is a different ball game. At this point of time, we are not close to getting into that business segment.

If customers want some book, which is not in your rolls, can you try and acquire it?  (Obviously, you’ll have more avenues than the customers)

We already are providing that service. If the book is not available with us, the customers can contact customer care and we try to make it available for them.

This is a bit of confidential question perhaps: how are these discounts on books decided?

The function of discounts depend on various factors ranging from deals we get from the distributors, demand for particular book, any promotional offers that we may be running and so on.

Indiaplaza has something like membership and all..in which the members get some more discount than others… does Flipkart have such facility? Or special benefits for customers who buy more?

No, Flipkart does not follow any such policy. We give equal discounts to all our customers.

Was Bangalore book fest appearance an experiment or..will it be a regular activity from now on? Are you guys coming to Hyderabad as well?

No, we will not be participating in the Hyderabad Book Fair.

Dint you try using something like – “pay on delivery” option? Rediff.com used to have it sometime back for its online shopping. It was for those who did not have credit/debit cards.

We have recently started providing the cash on delivery facility to our customers. It has been done to reach out to all those customers who do not have access to credit/debit cards but still want to make use of Flipkart’s services. Now, for all orders below Rs. 2500 that can be delivered within 7 days, our customers can pay us when they get their order.

How are the books selected?

We are not particular about the kind of books that we sell. We are happy to make available all the books available in the inventory of our supply chain partners.

Reg this only new books policy: What about out-of-print books, whose old copies are still available, then?

If the out-of-print is available with our distributors, we will be able to source them on request.

Was wondering about an idea of helping people choose books – no, not showing the suggestions. Perhaps, a more sophisticated search interfaces. Did such thoughts come in to your mind when the website was being developed? How do you assist the buyers – in a way that’s flipkart-ish? 🙂

A buyer needs to register before he makes his first purchase. This then helps us track his purchase, purchase frequency, purchase habits, payment modes, address changes etc with reference to that particular buyer.

Are there any plans to expand the business to other commodities other than books?

As I said earlier, recently we have started retailing CDs and DVDs of Music, Movies and Games. We also plan to retail software like Windows, Norton etc. in some time. We plan to keep adding categories as and when required to provide more options to our customers.