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Flipkart, which began as an online bookstore in 2007 and is now the country's largest online store, is looking at clothes and shoes as the next promising category. Under scrutiny for its foreign investment routing through a complex structure, it recently switched over to the marketplace model from being an inventory-led company. Co-founder & Chief Executive Officer Sachin Bansal answered queries on policy from Nivedita Mookerji. Edited excerpts:
There's a sense that you are diluting the focus on books. Is that correct?
We began with books when we launched Flipkart in 2007. We were then a very small company. Now, resources and people are much more, and we are still market leaders in books. We will continue to invest in the category. Books make up 20-25 per cent in volume and 15-20 per cent in value of the Flipkart sales.
Will the market share of books come down?
Book reading has grown in India and several new-age authors have come up. But, it is still a limited market. Clothing is 50 times bigger in size. So, the books' share at Flipkart is bound to come down.
What will you focus on this year?
We have just launched the marketplace model and we will continue to grow that. Clothes and shoes will get a much larger push.
What triggered Flipkart's shift to the marketplace model?
Inventory versus non-inventory model is not a debate. Then focus should be on reliability. We had thoughts on the marketplace model three years ago. Then, we thought of it seriously since 2011. The idea was to open up a platform so that there could be more sellers for customers and vice versa. We have now found the right opportunity to make the switch.
Is your $1 billion (Rs 5,500 crore) sales target for 2015 still valid?
Yes, we are working towards that.
What has been the employee growth since your launch?
We were just the two of us (with co-founder Binny Bansal) in the beginning. After that, growth has been fast. Now we have 2,500 fulltime employees.
There are reports of large-scale job losses at Flipkart.
There have been no large-scale job losses.
Since marketplace is about a lean model, what is the extent of expenditure cut you are aiming for?
Marketplace is not about cutting cost; it is a new line of business for us. We will work on it.
What has been the biggest hurdle for you?
Lack of reliable infrastructure, including roads and railways.
What about funding?
No, we haven't had problems with funding.
Don't you think the FDI policies on physical retail and e-commerce should be in sync? Wouldn't that make access to foreign funds easier for e-commerce players?
I cannot comment on policy issues. It is up to the government to decide. We are committed to compliance. But, overall, across sectors, I would say, India needs plenty of FDI to flow in.
Flipkart has cut its discounts considerably, disappointing buyers. Why?
We do provide discounts….We were never the price leader. Also, price is not the only reason why people come to Flipkart. Speed of delivery, quality of products and prices are all important. There may be adjustments at times, linked to market conditions.
How will Flipkart retain its edge, after switching to marketplace?
Customer experience remains the same, even with multiple sellers. It's not a free-for-all. We have criteria and strict guidelines that sellers must follow….the others have not got it right.
E-commerce players are focusing on user-friendly payment models. What about you?
We are toying with that idea, too.
If you were to start out now, would you have done things in any other way?
I would certainly be thinking differently. Even companies like Google and Facebook would be doing things differently, if they were starting out now. Time and business conditions do change the thought process.
Do you have any plans of stock market listing or an IPO?
We have not taken a decision on that. We have been talking to investors about it.
