 "Service, selection and price are the three pillars: Sachin Bansal")
We have seen Flipkart grow into a formidable brand in a short time but it has received its share of bad press and negative feedback on some ads, including the one that showed two northeast children giving two others a pedicure. What is the trick for companies for brand “rebuilding”?
As companies grow, challenges grow. When a company is small, not many people are paying it any attention. But as it grows, people (customers, the competition, media) sit back and start taking note. Clearly, then, companies have to act very responsibly, especially in understanding their offerings from the point of view of the customers’ sensitivity. We at Flipkart understand that. With growth the responsibility becomes larger, and companies need to work on it constantly. Yes, we made several mistakes as far as our initial advertising was concerned. We understood what our customers wanted. We didn’t argue, we just apologised and decided to change our stand, promising ourselves to be more careful in the future. It has been a learning; it has been part of growing.
Real learning happens not when mistakes occur, they happen when one promises not to repeat the same mistake. After the first TVC, we understood what not to do, we understood what the customers liked and expected from a brand like ours. The learning was put to work and for our forthcoming TVCs, we focused on getting feedback through social media — releasing our advertisements there, tweaking them based on the feedback and then releasing it nationally on television. So, the rebuilding happens when you continue with innovative thinking and ways of reaching out to customers. We have two foremost questions that we need to answer for our customers and our potential investors — what do we do about profitability; and how do we keep growing?
Did Flipkart make mistakes other than its advertisements?
Yes, we did. In fact, they are embarrassing because they were such silly mistakes that our initial business model was based on. When we realised the mistakes, it came as a rude shock. Some of our assumptions (many of which our business model was based on) were completely wrong and we had to suddenly deal with a lot of harsh realities that stared rudely in our face.
We started with selling books online without even mapping out the vendor space. We took for granted that any and every book available in India would obviously be available in Bangalore. And we thought that all vendors would welcome us with open arms because we were, after all, building this amazing, cool website that everyone would want to come to. So, these two assumptions broke. Also, we took for granted that our vendors would be technology-enabled. This was not the case and so our entire business model crashed even before we could start out. Though we wanted each and every book to be available on our website, we realised that the vendor segment in Bangalore was quite small. Within a year, we had to quickly move to Delhi to capture a larger market base and then we gradually started re-looking at our business model. Turning the mistake into a winning strategy required us to get our own logistics, our own warehouses and a very large network support team in place. I’m happy to report that compared to 2010, when Flipkart had Rs 3 crore sales, last year, our sales figure was Rs 100 crore. So, we have evolved. And we continue to evolve because we learn from companies around us as well.
How can mistakes be translated into winning strategies by companies?
Personally speaking, it’s ironical that even for entrepreneurs, “building an organisation” is the least understood aspect of creating a company! These days there are entrepreneurs who start right out of college, or after working for only a few years in companies. However capable the entrepreneur might be, one cannot chart out a winning company from Day 1. I’d say that the awareness that you as an entrepreneur will not know everything from Day 1 is important. Lots will be revealed over time, as and when your experiences and learnings take place. So, in terms of how things operate, how one hires the right employees, how one builds the organisation, how one looks at various aspects of the company, including finance, human resources … these are areas that entrepreneurs should be conscious of at the outset besides, of course, understanding that a company is built of people — a correct ecosystem involving vendors, suppliers, employees and customers.
Knowing the ecosystem at the outset is necessary and one needs to be conscious about what one is building. Having said that, here’s a paradox; beyond a point, there isn’t much entrepreneurs can do when they are starting out. An entrepreneur, for example, can’t be focused on just a “business organisation development plan” for one year even before the company has started. All that an entrepreneur can do is create and build an organisation with strong core values, spot the opportunities when they come along, and keep building on those opportunities without compromising the value system.
How should companies keep the core values intact, especially as they grow?
What’s really important is that companies should know that mistakes will be made time and again. Core values will never change (they can be different for different companies), but living those core values (whichever ones you offer to employees) on a day-to-day basis is important. At Flipkart, our core values are customer obsession, pursuit of excellence, being depth focused while also creating everything from scratch and, most importantly, always being a ‘merit-based’ organisation. We live these core principles on a day-to-day basis. One cannot define a core value and then make an exception to that; many companies tend to do that and that just devalues the core principle, thus adversely impacting the morale of the employees. So, whichever core values a company promises at its inception, it should be lived every day. That’s my philosophy.
| The journey of Flipkart Flipkart went live in 2007 with the objective of making books easily available to anyone who had internet access. Today, it is present across various categories including movies, music, games, mobiles, cameras, computers, healthcare and personal products, home appliances and electronics, stationery, perfumes, toys, apparel – and still counting |
It became popular with its services like cash-on-delivery, a 30-day replacement policy, EMI options and free shipping besides discounts for the customers
Though still not confirmed, rumours are rife that the company might add health supplements in the portfolio. In 2012, almost every month, the company was adding newer categories; Flyte (an online digital music store) was added last year
In 2012, the e-retailer raised $150 million from Accel, IDG, IndoUS and Tiger Global, and then expanded into new turf by acquiring Letsbuy, a specialised e-commerce site selling digital gadgets
As per Alexa rankings, a global company studying online traffic ratings, Flipkart is among the top 20 Indian web sites and is the largest online bookseller with over 11 million titles on offer
Should companies fight competition or learn from them?
At Flipkart, we study companies to see how they build organisations, how they build brands, how they conduct their marketing, how they manage the supply chain. There are several examples. We look at Dominos to learn about managing a fast delivery mechanism. We have observed and learnt from Airtel about effective marketing. Indigo is a great example in creating end-to-end customer experience. In that sense, we are very eager to look up to companies, organisations and individuals from whom we can learn, get inspired by and copy.
In the e-commerce category, Letsbuy.com has had much better execution with its warehousing, cataloguing and overall customer experience. It built a fabulous relationship with vendors in the electronic space (something that Flipkart hadn’t managed). We had been observing Letsbuy.com before we acquired it and saw that it was doing some incredible things even before we had set out to acquire it.
Having said that, I don’t think it’s always prudent to be ‘competition focused’. Yes, one should worry about competition but companies should look internally and focus on its own growth strategies. Too much focus on competition can be unhealthy.
E-commerce is one of the fastest growing market segments in India. What are the challenges peculiar to players in the category?
Those getting into the segment need to understand three things from the point of view of the customer. First, a website cannot sell low-quality products, and it has to deliver on time so that the trust can be built on. The second expectation is that websites should offer good stock and variety of products; this, by the way, is not an expectation one has from physical format stores.
So, if a website is selling socks, the variety in design and price has to be huge. The third aspect is the discounts offered. At Flipkart, we call these the three pillars on which the entire e-commerce model stands; service, selection and price. The fundamental of ecommerce is service to the customer.
How can ecommerce companies build the delivery mechanism effectively?
Delivery mechanism is very critical to this business because it drives credibility. At Flipkart, we work very closely with the vendors; if we promise delivery to the customer in two days, we will pay extra on our own but ensure that the customer experience is not compromised on. We always go with the better speed option and we encourage more use of technology – the more technology used (mobile apps, simple texting services, emails etc) the better customer experience. We have built these things into our delivery mechanism despite real-time challenges.
One of the biggest problems is making sure that the customer is present when the delivery is assured. So, we use technology to coordinate with the customer (sms-ing her and emailing her with the estimated time of delivery). In case, she is not present, we send the same delivery person with the product thus building customer relationship over time.