From new growth to changes galore: a look at 2017 for e-commerce giant Flipkart
Since its launch in 2007, Flipkart has grown from being an online bookstore into one of India’s most comprehensive and robust e-commerce platforms. Sachin and Binny Bansal's juggernaut has been dubbed the most trusted brand in e-commerce for Indian consumers by a study conducted by research firm RedSeer Consulting in November 2017.
This year marks the completion of a decade for the unicorn, and there have been plenty of developments to mark the occasion. We take a long look at some of the biggest developments at Flipkart in 2017, from management reshuffles to new partnerships and frontiers.
Changes, reshuffles, and more consolidation
The year started with the top-level reshuffling at Flipkart and head of category design Kalyan Krishnamurthy taking over as CEO. Nitin Seth, Flipkart’s Chief Peoples Officer, who took over as COO around the same time, however, left the company in a few months. He was also in charge of Flipkart’s logistics arm, Ekart.
Erstwhile CEO Binny Bansal was appointed the CEO of the Flipkart Group, an alliance between Flipkart, Myntra, Jabong, Ekart, and their digital payment arm PhonePe. The Group's structure was big news too, as it now aimed to build a portfolio of new, high-value businesses to disrupt e-commerce in India. With Group Strategy and M&A functions in place, this was Flipkart’s most definitive move thus far to truly take on giants like Amazon and Alibaba.
Later in the year, Flipkart shut down Ekart’s courier and hyperlocal delivery services in a bid to keep the focus on its core business model. Now Ekart caters to the likes of ShopClues and Paytm, even fulfills over 85 percent of Flipkart’s orders and over 10 percent of Myntra’s, and serves offline players Madura Fashion and Lifestyle too.
By the end of the year, Flipkart reinvigorated its commitment to Ekart with a fresh injection of Rs 3,000 crore (about $460 million) in relevant investments and acquisitions. It also announced a $500 million investment commitment to PhonePe in October this year.
PhonePe comes into its own
Digital finance platform PhonePe was acquired by Flipkart in April 2016. By January 2017, it had completed a landmark 10 million downloads on the Google Play Store. The app was used mostly for P2P payments or direct bank transfers. PhonePe also has 'm-wallet' features like recharges, bill payment, and P2P transactions. By January this year, it was available in nine languages, including Hindi, Tamil, Gujarati, Marathi, Bengali, Kannada, and English. Since then, PhonePe has announced plans to add three additional languages every month.
Private labels galore
Announced in December last year, Flipkart’s private label SmartBuy officially went live in January. Starting off with just electronics and mobile accessories, in the course of the year, SmartBuy forayed into several other categories including personal audio, home furnishings, appliances, personal grooming, and fashion. Flipkart also introduced Billion, their private label that focuses on the unique needs of Indian consumers.
Furthermore, Flipkart returned to the home and furniture game with private label Perfect Homes. With it, the company brought on board furniture brands like Lazy-Boy, Home Town, and Peps along with manufacturers from furniture hubs like Jaipur, Jodhpur, and Nagpur.
Following close was Flipkart’s foray into a private label for large appliances, MarQ. Microwave ovens became the first category to be launched under MarQ. The company also claimed that it would be pricing its products 10-20 percent lower than similar products from other brands.
The year ended with the launch of Flipkart’s first smartphone under the Billion brand, the Billion Capture+. The phone comes with dual cameras, fast charging, and full-HD display and runs on Android Nougat OS.
Moving to better account user and ecosystem experiences
In April this year, Flipkart launched its “Express Programme” which helped sellers mark orders ready for dispatch within two hours of receiving it. This helped reduce shipping time by a day.
Following the murder of delivery boy Nanjunda Swamy by a customer - who didn’t intend to pay for the phone he had ordered, the company launched Project Nanjunda. Under this, an SOS button was incorporated into the app to help field executives and delivery personnel alert authorities immediately in cases of medical or safety emergencies.
Ahead of GST, when all of Indian retail was under stress, the company announced that it would absorb the higher-end pricing under the new tax regime. It not only encouraged sellers registered with them to register under GST but also promised them tools to help with inventory and category organization and invoicing.
10-year anniversary celebrations
As part of its 10th-anniversary celebrations, the Bengaluru-based company conducted the Gridlock Hackathon this year. The objective of the hackathon was for techies, concerned citizens, and organisations to come together to solve Bengaluru's biggest pain point – its traffic jams. Out of the 3,000 registrations received, three winners were given support, including office space and technical assistance, as they bring the ideas to life with the Namma Bengaluru Foundation.
The Big10 Sale: Ready to take on Amazon, Flipkart went all out in its mid-year fashion sale, putting 99 percent of its fashion inventory on sale. The company claimed to have exceeded their target of 5x sales compared to “normal days”. Myntra and Jabong, owned by Flipkart, also boasted 2.5x sales during this sale. The company also claimed to have sold three times more smartphone units than the country has ever seen in a single day.
The Big Billion Days: Flipkart claimed a solid 58 percent market share in e-commerce post its Big Billion festive sale, according to reports from management consulting firm Red Seer. Of course, this included sales from Myntra and Jabong as well. The company also claimed 70 percent market share in fashion, mobile phones, and appliances.
Riding the business rollercoaster
For Flipkart, the year started with a four percent devaluation at $9.9 billion by minor investor T. Rowe Price. This was the sixth time the company was devalued since its peak valuation of $15.2 billion in 2015. The final round of devaluation came as recently as earlier this month, with mutual fund investor Valic Co. valuing it at an unprecedented low of $7.9 billion.
That, however, did not deter Bennett Coleman and Co Ltd. (BCCL) from investing Rs 260 crore in Flipkart in February 2017. In fact it follows the initial 26 crore BCCL invested in the e-commerce player in December 2016. The company also raised an additional $71 million in private equity funding led by Naspers, a South African technology investor. The funding raised Nasper’s stake in Flipkart to 16.5 percent.
Microsoft too, in a bid to take on AWS, announced a strategic cloud partnership with Flipkart. The partnership entailed Flipkart switching to Microsoft Azure as its exclusive public cloud partner. Starting with infrastructure, Azure is aiming to ultimately add a layer of advanced cloud technologies and analytics to Flipkart’s existing data centres.
No deal with Snapdeal
The year started with a great amount of speculation around Flipkart’s merger with Snapdeal and eBay. While Snapdeal didn’t come through, Flipkart did manage to raise a soaring $1.4 billion from eBay, Microsoft, and Tencent in its seventh round of funding. The deal also came with an acquisition of eBay.in on the sidelines. Post-merger, eBay claimed a 5.4 percent stake in Flipkart.
The company also raised an undisclosed amount from SoftBank Vision Fund and claimed that it was the biggest ever private investment in an Indian technology company. With this round of funding, SoftBank became one of Flipkart’s largest stakeholders.
In an unprecedented move following this development, Flipkart announced differential stock options to all eligible employees. The company announced that the move was to protect employees from the recent drop in share price, a privilege startups usually reserved for investors. (The stocks were given at a valuation of $15 billion, but the latest investment was done at $11.4 billion valuation, which means stock prices will also go down.)
Flipkart also invested in a pre-series A funding of $2 million in Tinystep, a parenting social network founded in 2015.
Into 2018, and beyond
From everyone’s favourite online bookseller to achieving unicorn status, and then crossing 100 million app downloads in 2017, Flipkart has come a long way. The underdog continues to play the big game, despite devaluations and thriving competition from many quarters. We’ll be watching closely to see how its story unfolds in 2018.