We have found ways to grow without burning money: Flipkart CEO

CEO Kalyan Krishnamurthy says Flipkart outsold its rivals during its five-day Big Billion Days sale

Over the past one year, Flipkart has perfected the model of growing without burning significant amounts of money, says Kalyan Krishnamurthy, chief executive officer of India’s largest e-commerce marketplace. In an interview to Alnoor Peermohamed and Raghu Krishnan, he also says Flipkart outsold its rivals during its five-day Big Billion Days (BBD) sale, which ended on September 24. The company’s biggest focus, he says, is to get customers to buy more often on the platform. Edited excerpts:

Can you quantify in terms of gross merchandise value how well Flipkart performed in this BBD sale?

We want to stay away from quoting specific numbers, but we have been able to triangulate the market. We had a 70 per cent share of commerce in these five days, but again it’s not just about BBD. We would like to continue this for the next 30 days and, eventually, for the entire year. From the growth point of view, we have roughly doubled our numbers related to transactions.

One of the big focuses of BBD is to bring users who have never shopped online to shop on your platform.

Our overall user base has roughly doubled, and about a third of that was new users. Last year, a little less than a third of our users were new users, and this time it is just over a third. Our total active customer base has doubled.

An interesting thing we are seeing in e-commerce is the retention of customers through subscription-based models.

Retention has been low, but we have made it a big agenda for this year. Once categories such as groceries and low-cost fashion are able to establish themselves with a proven business model, that’s when retention will increase. It’s not like there is a subscription-led e-commerce model yet. Some of the players have chosen to subsidise shipping cost in the name of a loyalty programme and that’s not the way we have actually looked at the market. 

                      

Your recent statements on cash burn make it sound like Flipkart is undoing everything it did in terms of streamlining its business in the past one-and-a-half years.

In the lifecycle of every company, especially in an industry where you are the market leader, there are four of five metrics which are the top priorities for you. Last year, there was a time when bringing back our customer growth and at the same time reducing burn in a very big way were the top two metrics we were looking at. Now, when I look at it this year, we over-delivered on those metrics and overachieved there. So they are no longer our top two priorities. We are not going to lose responsibility on cash burn.

Flipkart had stalled on its growth. Is there more focus on rectifying that now?

We are going to expand the market, that’s the responsibility of a market leader, right? An event like BBD does exactly that. It allows us to experiment new concepts and bring new things to the market. That said, I want to be very clear that we should disconnect this with burning money. We are not in the stage of e-commerce in India where anything you do requires you to burn a lot of money. To give you an example, we got into furniture 10 days before BBD and we got stocked out within the first three days of the sale. I’m telling you this because it’s an expansion of the market, but this category operates at a positive contribution margin. We should disconnect the two concepts of expanding the market and burning money.

This is the second successful BBD after you came back to Flipkart, and you claim you are the dominant player in terms of market share. What’s next?

It’s not just about market share. As a market leader, market share is a distant second in terms of the metrics we track. The most important thing is how you get a huge number of people in the country to shop on your platform. That’s a huge challenge we are facing.