Can Flipkart be Saved? Can Arithmetic be Altered?

It is no news that Flipkart is faltering. Fighting bravely, but faltering. Struggling to keep up with Amazon in the game that they themselves played against all the Indian players earlier – the game of the last man standing. A game that relies on having deep pockets.

Let me pause here for a moment before going ahead. You cannot take away from Flipkart everything that they have done right. The deep pocket by itself wouldn’t have taken them where they have reached. It was the execution that attracted the money in the first place. And they continued to excel at the execution after the money came. If any Indian e-commerce player deserved the money, it was them.

 

But life isn’t fair. Even if you have worked the hardest and have access to the best coaching centers, you are not guaranteed to be the exam topper throughout your life. In the form of Amazon, Flipkart has encountered a rival unlike any of the homegrown ones. Amazon has an even easier access to money and a much longer experience of good execution. In Indian market they even benefited from the ground Flipkart had already prepared. When Amazon came, customers as well as sellers were already sold on the Indian e-commerce story. They didn’t have to stand outside distributors’ office just so they could get their catalogs and stock information. They had it all readily available for them. But they didn’t squander the advantage away. They went ahead and built on top of it. Did local things that even the local boy Flipkart hadn’t done. Tight integration with and extensive use of India Post, for example. The stamps tell the story!

There is more. Even now Amazon isn’t standing on its current laurels. They are taking the full advantage of the long staying power the money gives them. They are serious about even a category like books which, at best, has been written off as a marketing cost by their Indian counterparts, and at worst, has been removed from their offerings altogether. They aren’t giving up on Kindle or eBooks in India although it is a given that eBooks in India have a long, long way to go. They do things like incentivizing sellers for listing regional language titles. They have invested in Westland Books. And did anyone notice that they have quietly entered the second-hand book market through Junglee? (Refurbished mobile phone are there too.) They became a formidable force in the publishing industry in the US. In India, they might very well be the one to build a market for books like nobody else has done before.

Given Amazon, can Flipkart do anything right to fix things? Can Flipkart aim to be profitable? Even if it is in select categories? Why would Amazon not undercut them in whatever category they wish to? Can private label really save them? In how many categories? And by what margin? Once you go beyond consulting-speak these are the fundamental questions that must be asked? And unfortunately, they do not seem to have an easy answer. Amazon doesn’t have an obvious weakness. So “not focusing on the competitor” is not going to work for Flipkart, because really! What is the differentiator? When it comes to Paytm and Snapdeal, customer service can be. But when it comes to Amazon, unfortunately not.

I don’t want Flipkart to be decimated. Not out of any patriotic feelings, but for very selfish reasons. As a business where a decent amount of our revenue comes through established e-commerce channels, I don’t want to be dependent on one player. As a customer, of course, one can’t want a monopoly. And in either of the roles, I don’t trust Amazon to be nice. It is a ruthless company. All its nicety is only good business. It can be terrible. For sellers, of course. But also for customers.

As much as I want Flipkart to be in the game as a strong player, unless a policy change creates some major hurdle for Amazon (I can’t imagine what that would be) or the funding issues are somehow sorted out for Flipkart (for the long term), the situation looks pretty bleak. You can’t alter the basic arithmetic. If the other guy is willing to lose money, and has all the advantages you have, how do you get customers? Become a niche player, an MBA case-study would have pointed out the solution. But can you? Given the amount of money that has gone into making Flipkart the leading generic e-commerce player, the idea of it becoming a niche player sounds laughable. Can it tackle Amazon through some other means? By not fighting head on with it? Using something else? What? Amazon has AWS. Flipkart has? eKart? Now logistics is an industry that can very well be disrupted for good in India. There have also been attempts at making eKart a business in itself, hopefully a profitable one. But can Flipkart, the poster-boy of Indian e-commerce, with billions sunk into making it so, pivot and become primarily a logistic player? I have a feeling I will get worse than dirty looks if I were a consultant suggesting this.

What then? I believe in miracles. I also believe that miracles are made from hard work. But I don’t think you can plan and PR your way into being miraculous. I would pray for the miracle. I am not holding my breath for it, though. Another round of funding could postpone the problem for a year or two, of course. But it isn’t going away.

This entry was posted in Business & Entrepreneurship and tagged , , , by Jaya. Bookmark the permalink.

About Jaya

Jaya Jha is an entrepreneur, a techie, a writer and a poet. She was born and brought up in various towns of Bihar and Jharkhand. A graduate of IIT Kanpur and IIM Lucknow, she realized early on that the corporate world was not her cup of tea. In 2008, she started Pothi.com, one of the first print-on-demand publishing platform in India. She currently lives in Bangalore and divides her time between writing and working on her company's latest product InstaScribe (http://instascribe.com) with a vision to make it the best e-book creation tool. Blog: https://jayajha.wordpress.com Twitter: @jayajha Facebook: http://facebook.com/MovingOnTheBook

7 thoughts on “Can Flipkart be Saved? Can Arithmetic be Altered?

  1. There was speculation around Flipkart, Snapdeal and Paytm joining hands against Amazon. I think they had some common investors among them. Don’t know if it will really change the equation or just postpone things though

    • Paytm, as far as I can see, is more in payments game than e-commerce game. Even if common investors forced their hands, I am afraid there would too many ego-clashes and cultural issues in a joint effort like that.

    • Yep. For a long time now, the individual channel volumes keep see-sawing depending on who is spending on discounts. The overall count remains the same.

  2. In the last couple of months, there have been at least 5 occasions when I wanted to buy something from flipkart (mostly books), but wasn’t available there, and I could order it on amazon. Have not been following business news, but this was good enough indication to me that something is wrong at Flipkart.

    • Yeah. I haven’t gone into some of the desperate, half-baked measures they have taken to retain market share, which must have backfired. One of them was to make it mandatory for the sellers to not charge shipping on the books. This might look good superficially – of course, customers want free shipping – but it has other effects. Shipping cost was not zero for the sellers. Sellers could only use Flipkart’s logistic to ship for which they had to pay regular rates. Flipkart had made their commission “zero” to compensate. But “zero” came with conditions applied. There were still other fees, which came to about half of what their effective fee with the regular commission was. So essentially a seller had to absorb the cost of shipping as well as half the original commission in the regular price. It simply didn’t work for a large number of books. Books are heavy items and when the MRP was low, you ended up paying to Flipkart to sell a book. Result? Sellers (who do not have VC funding to lose) removed their books and Flipkart’s selection went down the drain.

      Now they have reversed that policy. The commissions are up again and you are allowed to charge shipping. But too much damage might have been done already. As a buyer, since a long time, I don’t even look for a book on Flipkart.

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