Why Flipkart.com works
Think about the last 10 books you read and the reason you picked them up and not any other. In my case, all of them were recommended by friends, or by the author/publisher/editor, or by Amazon.com which knows my reading patterns, or by fellow reviewers of books in the blogosphere and media. Whenever I found myself in a bookstore on impulse, I returned empty handed. Probably picked up a new release by a favorite author every once in a few visits. A book is something we give many hours of our time to and therefore build a fairly strong reason to read it before deciding to purchase a book.
One of the books recommended by a friend two years ago was Cosmicomics by Italo Calvino. Since then, I have been trying to get my hands on the book in Mumbai. Small bookstores like Granth and Danai in my area did not have it and couldn’t get it for me all this while. Large bookstores like Landmark and Crosswords did not have it and could not find it in stock at any of their outlets across Mumbai. Online stores like Indiaplaza and Indiatimes had no clue who Italo Calvino is. I finally found my copy on Flipkart.com. Found it the first time I looked, ordered it for Rs.561 and am halfway through the book in the following week.
Books are the killer category (arguably) that brought e-commerce to the world. After a decade of failed attempts in India to create an online business for books, along comes Flipkart.com and makes it happen. At the time of writing this, I estimate that they do 40,000 transactions a month at an average selling price of Rs.500. Why did this work now and not in the last 10 years? More Internet penetration - No. More book enthusiasts - No. Past entrepreneurs were stupid - No. Better recommendations & reviews - No.
When you Google a book, you will find it on Flipkart.com. When you land up on Flipkart.com, you will get a certain comfort about the site, about the offer price and about the delivery time-frame. Once you give it a shot and have a good experience, you will go back to it once again when looking for a book. After successive positive experiences, you will tell your fellow readers about it. Millions of such chains are being fanned out. Flipkart.com simply created a comprehensive catalog, made it easily accessible online, gave you all information you needed about the book and nothing you didn’t, did enough to win your trial at the risk of losing a few hundred rupees, then delighted you with the experience to create a habit of coming back.
Indiaplaza, Rediff, Indiatimes and all other past online book stores tried to replicate the in-store format of taking the highest moving books, giving it prime real estate, deeply discounting them, and then grabbing a small part of the funnel for temporarily high moving titles. As a regular reader, you could not find what you were looking for. As an impulse reader, you would decide to read what the store wanted you to read every once in a while. The limitations that made book retailers unprofitable, became precisely the reasons why online retailers did not scale.
It’s heartening to see that simple things done right still result in scaled businesses, even in India. Flipkart addresses an interesting niche. As it expands, it will hopefully not get carried away, be mindful of its customer base and try to sell more things that that customer segment needs. It should also be deliberate about maintaining the same levels of service in other categories it enters where timely deliveries are easier said than done. At Chaupaati, many of us are fans of Flipkart as customers as well as entrepreneurs. We look forward to learning more from this cool company and these phenomenal entrepreneurs.
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[...] sent me a mail and she mentioned the “Why Flipkart Works” write-up on the Chaupaati.in Blog, one thing led to another … a few Tweets and ReTweets … and Kashyap Deorah got dragged [...]
I agree totally. Awesome “Indian” web service.
Dear Kashyap Deorah,
This is to inform you that there is an eCommerce Portal with the name of dkpd.com which was introduced in 2000 as FIRST ONLINE INDIAN BOOK STORE. It was fully functional and till date its fully functional and they have done business more than you mentioned for the first 5 years.
Nothing personal.
Sir, I would like to purchase The Little Voodoo Kit by Jean Paul Poupette. Could you p. Thanks.ossibly help me
i am reading “INDIAN POLITY FOR CIVIL SERVICES EXAMINATIONS” buyed from flipkart, no one has suggested to take me that book, but i had taken. will it be useful for me? can i gain knowledge by reading that book? please give me reply…
Kashyap,
Another thing that helped me get started with Flipkart was the Cash on Delivery option. This, to me, was a risk-free way of trying their service out.
Smart Shopper (another site with loads of cool electronic stuff) loses out in this respect. They do not have an option of COD and therefore have not gotten a single deal from me.
User experience and selection of titles is important. But winning customer trust by providing a risk free way of exploring their services is equally vital for eCommerce firms.
Cheers,
Dhar
Kashyap,
Agree with Dhar here. It’s interesting you write about flip-kart, for I was thinking about this the other day. The way I think about it is that there are three key stages one needs to look at:
1. Getting someone on to Flip-kart: and here technology (Google ranking) and marketing (both advertisements and word of mouth - trust me the word of mouth for Flip-kart (FK) is phenomenal). FK scores high on at least 2 out of the three factors here
2. Getting someone to buy: Here in comes the big clincher of cash-on-delivery. For an average Indian consumer, this is a major factor. And of course the catalog, product basket, website layout etc. is very user friendly and like you said ‘comfortable’
3. Getting the customer back on the website: This I personally think is the biggest value kicker for their business. The logistics, user experience and CRM is quite fantastic.
Obviously, many of these factors have inter-play. Also, it looks like their strategic way forward is going to be quite effective - they are focusing on the user experience and products basket (getting international products). Having a strong analytics division will help in both and raise the CRM standards.
And lastly, the transactions that you have quoted seem to be quite old to me. This rate will give me a mere Rs. 24 Cr. top line - that is a 41X sales multiple for their latest valuation. I guess transactions at FK are growing very strongly - having a multiplicative impact of the three stages mentioned above - they are selling more to new customers and are also getting more customers.
Cheers,
Abhilash
@Abhilash: Someone told me they are doing close to a crore of business per day. Not sure of the validity of that number though. :)
Cheers,
Dhar
@Dhar - this seems more like the no. My bad on the previous 41X no. The latest valuation is around $1 bn (when poor INR was at around 46 per USD). At 1 Cr. per day, the sales multiple looks like 12 - 13X - so your no. seems to be in the ball park.
Cheers!