Top online books retailer wants to be the largest in India; to leave out groceries and automobiles.
Flipkart, India's largest online book chain, which has now diversified into other categories, is looking at closing this financial year with a more than 10-fold growth in revenue.
In an interview to Business Standard, Flipkart co-founder and chief executive officer (CEO) Sachin Bansal said, “In terms of revenue, we are looking at Rs 500 crore to Rs 600 crore in the current financial year.” The company had clocked a revenue of Rs 50 crore in 2010-11.
The e-commerce firm, started by two IIT Delhi classmates and then Amazon.com colleagues Sachin Bansal and Binny Bansal in 2007, is hoping to hit a revenue figure of $1 billion (Rs 5,000 crore) in the next two to three years, much ahead of the company’s 2015 target.
With the aim of becoming the largest retailer of India, Flipkart wants to be present across all categories, except in groceries and automobiles, the CEO said. “Our target is not just those who shop online. We want to highlight the convenience of e-commerce to traditional offline shoppers and, thus, help grow the market.”
Although the company is making profits per transaction, it is in the red at an operational level due to investments being made in areas such as technology, supply chain, logistics, customer support and marketing to scale up the business.
Is Amazon’s entry into India a threat for Flipkart? According to Bansal, the industry growth will escalate with the entry of serious players like Amazon. “We do not see this impacting Flipkart’s plans to a great extent.” He said Flipkart has met all the benchmarks it had set and that it was “confident of retaining the leadership position in e-commerce”.
He denied there were any exit plans. “Selling our business does not feature in our future plans. In fact, we intend to establish Flipkart as the largest retailer in the country,” he said.
Speaking on their expansion plans for 2012 and in the next couple of years, Bansal said, “As far as the future is concerned, we will look at bigger investments in our supply chain and technology. This should result in larger warehouses and increased automation of our processes.”
The company recently added computer peripherals, kitchen appliances, televisions and home theatre systems and selected stationery items to its product range. Currently present in 12 categories, it wants to diversify further. “We intend to enter into various new categories and expand on our current categories as well. Everything, except for groceries and automobiles, is fair game for Flipkart,” said Bansal.
While seeking to be a one-stop shop, Bansal referred to cash/card on delivery, 30-day replacement policy, equated monthly installment and 24X7 customer support as Flipkart’s path-breaking services that make this firm different from the other players in this space.
To go up further in the value chain, it is looking at associations with a larger number of suppliers and partners – both nationally and internationally. “Currently, we work with 1,500 suppliers across the country and a significant number of major international ones.”
On consolidation prospects in the online space, Bansal agreed the e-commerce sector was witnessing a high level of interest from various players. “With increased attention from the government, private players and investors alike, more and more companies are entering this market. As the industry matures, there should be some consolidation with the emergence of larger and better established players.”
On acquisition plans, he said, “We are currently focused on expanding our business, and any partnership that adds value to our offerings will be considered.” It recently acquired the digital platform Mime360 as well as the digital catalogue of Chakpak.
“Talk of any future acquisition will be speculation at this stage and we would not like to comment on the same,” he said.
When asked about Flipkart’s listing plans, the company said there was nothing in the horizon yet. It does have international ambitions, but “it would be some time before they actually look overseas”. On e-books, he said, “We are keeping a close eye on the market trends and will make our foray into the e-books space at the right time.”
The e-commerce industry is expected to grow by 47 per cent in 2011 to reach Rs 46,520 crore by the year-end, according to a report by the Internet and Mobile Association of India. The number of e-commerce users is pegged at 10 million.
Over the last two years, the company has raised $31 million in venture capital and has invested it back into various sectors of the business.
From a two-member team in 2007, the company now has 4,500 employees across the country. With close to 11.5 million titles, Flipkart is the largest online book retailer in India with 80 per cent market share. It has a registered user base of two million customers and ships out as many as 30,000 items a day, clocking daily sales of Rs 2.5 crore.