Flipkart is an Indian electronics commerce company based in Bangalore. It was founded in 2007 by Binny Bansal and Sachin Bansal. Ten years later, Flipkart was valued at 11.6 billion USD.
Short facts about Flipkart
|Type of business||Private|
|Sector||E-commerce / Online shopping|
|Key people||Binny Bansal (Group CEO)
Kalyan Krishnamurthy (CEO)
|Revenue||₹15,129 crore (2016)
This is the equivalent of circa 2.3 billion USD
Exclusive product launches
Flipkart has been the market place for several highly successful exclusive product launches, events that haven’t just sold a lot of products in a very short time but also served to create a lot of buzz for the products and their manufactures.
On February 5, 2014, Motorola Mobility premiered its budget smartphone Moto G on Flipkart. The event went very well, and on March 19, Flipkart was the exclusive seller of the new Moto X Android from Motorola.
Flipkart has also held similar events together with Chinese smartphone manufacturer Xiaomi. When the high-end Xiaomi Mi3 was launched in India, it was available for purchase from Flipkart only.
On September 2, 2014, a flash sale of the budget Android smartphone Redmi 1S was held on Flipkart, selling 40,000 units within a few seconds – despite the fact that the product had been available in India since July.
On December 2, 2014, 50,000 units of Xiaomi’s Redmi Note phone was sold in less than ten seconds when it was launched exclusively on Flipkart for the Indian market.
A majority of everything sold on Flipkart comes from third-party sources, but some in-house products are also available – chiefly electronics under the DigiFlip brand.
In July 2014, Flipkart premiered its own set of mobile phones, tablets and phablets. This launch included the popular DigiFlip Pro XT 712 Tablet. A Flipkart branded networking router was also offered: the DigiFlip WR001 300 Mbit/s Wireless N Router.
Later that year, Flipkart started selling their own in-house home appliances and personal healthcare products under the brand name Citron.
Background and founding
Flipkart was founded by Sachin Bansal and Binny Bansal in 2007. They are not close relatives or married, they just happen to have the same last name. Both of them studied at the Indian Institute of Technology Delhi and then went on to work for Amazon.com.
After leaving Amazon.com, Bansal and Bansal founded Flipkart Online Services Ptv. Ltd in October 2007. The new company’s very first customer was located in Hyderabad and bought the book “Leaving Microsoft To Change The World”.
Approximately 400,000 rupees in cash (circa 6,500 USD) was used to set up the business, build the website and launch Flipkart. The original headquarters of the company was an apartment in Bangalore. After the launch, Sachin and Binny would use their scooters to deliver goods themselves across Bangalore.
In 2009, Flipkart raised $1 million USD in funding from venture capital fund Accel India.
Flipkart’s reported sales for FY 2008-2009 amounted to ₹40 million (circa 620,000 USD)
Flipkarts reported sales were ₹200 million (circa 3.1 million USD) for FY 2009–2010.
In 2010, Flipkart raised 10 million USD in funding from venture capital fund Tiger Global.
In 2011, Flipkart raised another 20 million USD in funding from Tiger Global.
Reported sales for FY 2010-2011 was ₹750 million circa 12 million USD).
Flipkarts Flyte Digital Music Store opened in February, a legal download service for music.
In August, Flipkart completed its 4th round of 150 million USD funding from MIH (Naspers Group) and ICNOIQ Capital.
I November, Flipkart, among others, were probed for alleged violations of the Foreign Exchange Management Act of 1999. On the last day of November, Flipkart’s offices were raided by the Enforcement Directorate, who seized documents and hard drives.
At CNBC TV 18’s “India Business Leader Awards 2012”, Flipkart.com was honored as “The Young Turk of the Year”.
June: Flyte Digital Music Store is closed, since internet users are going to free music streaming sites instead of Flyte.
July: Flipkart raises 200 million USD in venture capital from existing investors.
October: Flipkart raises 160 million USD in venture capital from existing investor Tiger Global + several new investors, including Morgan Stanley Wealth Management, Vulcan Inc, Sofina SA, and Dragoneer Investment Group.
For the FY 2012-2013, Flipkarts reports a ₹2.81 billion (circa 44 million USD) loss.
The Indian paper “Economic Times” names Sachin Bansal as Entrepreneur of the Year 2012-2013.
May: Flipkart raised 210 million USD from new investor Yuri Milner’s DST Global and existing investors Tiger Global, Naspers and Iconiq Capital.
July: Flipkart began selling several in-house products under its own brands DigiFlip (electronics) and Citron (home appliances and personal healthcare).
July: Flipkart raised 1 billion USD from new investor Singapore sovereign-wealth fund GIC and existing investors Accel Partners, Tiger Global and Morgan Stanley Investment Management.
Big Billion Day
To create buzz and increase the popularity of Flipkart, a campaign named Big Billion Day took place on October 6. The idea was to make 1 billion sales within a day by offering really low prices – often below cost.
Big Billion Day was a huge success, but also caused irritation among consumers since the high server load make it difficult for many to place their orders. Also, many buyers who had placed orders were later told by email that their orders had been cancelled.
Big Billion Day was also criticized by competitors who claimed that selling below cost was anti-competitive behavior and a violation of India’s commerce policy. Several complaints were filed with the commerce ministry.
Despite this negative feedback for its first Big Billion Day, Flipkart soon arranged a second Big Billion Sale – where it reportedly saw a business turnover of 300 million USD in gross merchandise volume.
Plans to go public
On December 20, Flipkart announced that planned to become a public company and filed an application with Singapore-based companies regulator ACRA. Flipkart raised 700 million USD in an other round of funding, with its number of investors now reaching a total of 50. Examples of new investors participating in this round of funding were the Qatar Investment Authority, Steadview Capital, Greenoaks Capital, Baillie Gifford, and T. Rowe Price Associates.
After getting its 700 million USD in funding, Flipkart reached a market cap of 11 billion USD.
In April, Flipkart retracted its decision to use the Airtel Zero platform. Their proposed partnership with Airtel would have made traffic to the Flipkart app free for Airtel users, and this was criticized by champions of net neutrality.
In May, Flipkart raised 550 million USD from some of its existing investors. This boosted the valuation of Flipkart to approximately 15 billion USD.
In August, Flipkart raised an additional 700 million USD in funding.
When Flipkart was first launched back in 2007, the founders would deliver goods themselves, using their scooters to get around in Bangalore. In 2015, they repeated this by personally showing up at the doorsteps of various customers to deliver goods and gaining insights from the clients. Now, they were no longer struggling entrepreneurs – each of them had an estimated net worth of 1.3 billion USD and was included in the Forbes India Rich List.
In 2016, Time Magazine included Binny and Sachin Bansal on their prestigious list of The 100 Most Influential People. Back home in India, however, the year brought some legal and political troubles to Flipkart. In January, a public interest litigation came up for hearing where Flipkart was accused of contravening foreign investment norms. In February, the Indian health minister, J P Nadda, revealed that the Maharashtra FDA had taken action against Flipkart (and other companies) for selling drugs without valid license. 2016 was also the year when the Government of India informed parliament that the Enforcement Directorate had been tasked to investigate Flipkart.
In April, a deal was finalized between Flipkart and eBay. Ebay agreed to make a 500 million USD cash investment in and sell its eBay.in business to Flipkart, receiving an equity stake in Flipkart in exchange. According to an official statement from Flipkart, eBay.in will not be integrated into the Flipkart site. Instead, Flipkart will run eBay.in separately.
April was also the month when Flipkart announced that they had secured 1.4 billion USD in a new round of funding. The company was now valued at 11.6 billion USD. Examples of new investors that entered through this round were eBay, Microsoft and Tencent. Existing investors such as Accel, Naspers, Tiger Global and DST Global also participated.
Since 2010, Flipkart has acquired a wide range of other businesses. Here area a few examples:
|WeRead||A social book discovery tool bought by Flipkart in 2010|
|Mime360.com||Digital content platform bought in October 2011|
|Letsbuy.com||Indian e-retailer in electronics, bought by Flipkart for an estimated 25 million USD. All traffic to Letsbuy.com was then diverted to Flipkart’s platform.|
|Myntra.com||Bought for an estimated 310 million USD in 2014.|
|Appiterate||Mobile marketing start-up bought in 2015 to improve the mobile platform.|
|Jabong||Bought by Flipkart in 2016 for 70 million USD. Jabong was one of Flipkarts competitor’s within the fashion segment.|
|PhonePe||Payment start-up bought in 2016.|