Flipkart neither run by me nor Krishnamurthy: Binny Bansal in Sept 2016

In this Sep 2016 interview with <i>Business Standard</i>, Bansal said firm was all about team work

In September 2016, after growth slowed in the first six monthsof the year, the e-commerce companies in the country were gearing up for the festive season that would see big sales. Leading the pack was Flipkart, the largest Indian e-commerce firm. In a telephonic interview with Business Standard's Alnoor Peermohamed, Binny Bansal, the then CEO of Flipkart , had said the e-commerce giant was neither run him nor by Kalyan Krishnamurthy, the Tiger Global executive who has now been appointed the CEO of Flipkart. The e-commerce major was all about team work, Bansal had said. Bansal had also said that the company had 100 million users. This growth occurred despite competition from the international e-commerce giant Amazon becoming aggressive in India. The task now was to convert the 100 million to shop every month on its platform, even as it targeted the next 100 million in two or three years.

Here are the edited excerpts of the interview with Binny Bansal published in Business Standard on September 22, 2016:

With the FDI norms in e-commerce not allowing discounts, how is Flipkart going to manage offers it plans to give this festive season?

Over the past two years, we have expanded the marketplace and have worked very hard with our sellers on making good-quality products available at affordable prices to our customers. We are looking at what our customers want in the festival season and how we can work with our sellers to get the best quality. Price is not the only thing, it is about quality products made affordable. We are confident our value proposition of quality products at affordable prices and the delivery experience we provide is going to be the way ahead of anybody else.

What sort of growth, in terms of volumes and sales, are you looking at during this season?

From a growth perspective we are looking at something between 2.5-3 times the regular sales that we do in any month.

Would you be able to quantify that in dollar terms?

No, we've stopped talking about dollar figures. That is the lesson we have learnt.

You had said the market was not expanding as quickly as you had expected. Is this 100 million a sort of plateau that you've hit?

We have seen exponential growth year over year for the last nine years and we have reached 100 million registered customers. We have seen in the recent past that there is a little bit of a slowdown from that overall growth in the whole internet space. We are seeing android smartphone growth becoming slower. But, with a view of the future, the telecom markets are again opening up and handsets are getting cheaper and the overall internet wave in India is only going to increase now.

It is going to go back to the very high growth rates. So, taking a long-term view, it's still early days and there's a lot of growth ahead of us.

So, while 100 million is a big number, the two big areas of focus for us now are how to get the next 100 million and how to get that 100 million to buy a lot more frequently than now - to buy every month.

Where will these next 100 million customers come from? How soon will you get them?

I think a big part of the next 100 million will come from similar demographics, similar regional profiles as the current users, because there is a lot of room for growth for users who will start transacting online and start using e-commerce. And I think another half of them will come from the new users from tier-II and -III cities and rural areas.

The next 100 million users will come much faster than the nine years it took us till now. The next two to three years is the timeframe.

How far away is Flipkart from profitability?

We are in very early stages of e-commerce in India - just 2 per cent of retail and there is room for growth. As you start scaling up, the cost of doing business will come down. We are now able to leverage our technology and supply chain investment at a much higher scale. In the e-commerce business, scale and profitability go hand in hand. The bigger you are the more profitable you get. As we began scaling year over year our profitability is improving at the same rate. If we are able to grow at a good pace as we have been, profitability takes care of itself.

Amazon is pumping massive amounts in the Indian market, how well capitalised to take them on. Can you say that your revenues are significant enough to keep up?

The market is very nascent. Only two percent of the market is online and it is a long way to go. If you look back, the market expanded every time Flipkart brought out an innovation - when we introduced COD the market expanded crazily. It was the same when we offered 30 day returns guarantee and when we started working with new age mobile companies Xiaomi and Motorola. We recently launched no cost EMI, we are seeing the same growth repeating again.

The bigger challenge is how do we grow this market. It is not taking market share. The biggest question is how and who is going to innovate. Innovation requires some capital, but taking market share from one to another requires more capital. We are the only ones innovating and continue to innovate.

You have seen lots of people quitting in the last few months. How are you handling it?

We always focused on building an organisation for the future. We have been evolving as an organisation. Flipkart has strong brands in its fold - Myntra, Jabong, PhonePe, Ekart and of course Flipkart. If I step back to look at the talent that we have across five brands, it is by far the best not just in e-commerce but across all industries. I feel really good about that. With the team we have we absolutely continue to innovate and deliver value to customers.

We hear that Flipkart is run by Kalyan (Krishnamurthy) and not by Binny. How true or false is that?

Kalyan (laughs) just came (from Tiger Global) a couple of months back, I don't know how he is running things from our side. I think it is neither run by Binny nor Kalyan, it is a lot of team work. Lot of things we run is because of the technology we have built and we are a strong technology organisation . We have four strong leaders in Ravi Ganapathy, Ravi Krishnaswamy, Hari and Ashish Agarwal. The team that is running technology is world class and there is no comparison.

Do you need to raise fresh funds?

We are well capitalised to invest in technology, supply chain and to get to the next level of growth. One thing we should remember is that Flipkart has been in the top five companies globally to raise private capital. So that amount of capital is very meaningful. We have been very diligent and focused on spending that capital. Our complete focus is on growing the business, innovating for our customer and capital is not in my focus area.