On October 2, 2016, FactorDaily’s Pankaj Mishra and Jayadevan PK spent a whole lot of time at Flipkart’s office during the annual Big Billion Day (BBD) sale. During this time, they also met with Flipkart CEO Binny Bansal for a rambling, free-wheeling conversation, touching upon everything from the run-up to the BBD sale and its impact on the company and on retail in India, to the need for innovation, the future of Indian ecommerce, and on Flipkart’s own future as the bellwether of the industry.
Edited excerpts from the interview:
PM: So let’s start with the most basic question: What does the Big Billion Day sale (BBD) mean to you at Flipkart? That would be a good place to start.
Binny Bansal (BB): What does BBD mean to me? Many things. Just like you saw, it’s like a celebration. For employees, for customers… Over the last two weeks, everyone I meet is saying ‘we are getting ready for BBD’. Not internally, customers! Customers are telling me ‘we are getting ready for BBD’. (laughs) (They are sayin) “mere bachche taiyar hain, the kids are ready, they’ll be up at 12 when the sale starts”. Andar to sab ready ho rahen hain… but bahar bhi (We are getting ready within Flipkart, but people are gearing up outside too). That’s what people have been telling me. Lots of pressure! (laughs).
Customers are telling me ‘we are getting ready for BBD’. They are saying ‘mere bachche taiyar hain, the kids are ready’
Secondly, industry ke angle se (if I look at it from the point of view of the industry), it pushes the whole thing forward. It’s not about Flipkart, it pushes e-commerce forward. Pushes all the vendors, all the partners, all our competitors, even offline retail. So everyone stands up, takes notice. It’s also an industry event, not just a Flipkart event. And internally, if I look at it, it tests us to our limit. In every way, end-to-end, everything gets tested. Supply chain, technology… You were on the tech floor right now, well they get tested for less than the traffic we are getting right now (laughs). Ya, we are getting way more traffic right now — on the app especially. And it’s holding up.
I saw engineers spending all their time in the office in the last six weeks… they haven’t left the building. We got 200 mattresses into the building. They are super thrilled.
Then obviously it’s also about deals… a lot of effort goes into putting the offers together. We get some deep insights from that… what Indian consumers need. BBD also sets the benchmark internally — ki kitna ho sakta hai (we can do so much).
I saw engineers spending all their time in the office in the last six weeks… they haven’t left the building. We got 200 mattresses into the building.
I saw engineers spending all their time in the office in the last six weeks… they haven’t left the building. We got 200 mattresses into the building.
I was telling the story of how it started… So Kalyan (Krishnamurthy; Head, Category Design Organization) and I had gone to some ecommerce conference in Dubai and there was some small company presenting and the founder was telling a Black Friday type of story… by the way, at that point we hadn’t done a big sale or anything at Flipkart. So, the founder was saying they did about 10X or 20X of sale (during that period). This was back in 2014, early 2014 actually, and Kalyan was running the business side, like he is now. I told him ‘dekho yeh dus pandrah X karte hain to hum (if they do 10X or 15X of business then we) at Flipkart, we should at least do 20X.’ (Laughs)
That’s how it all got started. Basically, we put the whole thing together, we came up with a property name. Before that we did the Diwali cybersale in 2013 — it was like a very basic version, it wasn’t planned 8-9 months ahead, it was like last ek dedh mahine mein kuchh kuchh karke (somehow in the last one, one-and-a-half months) just put together a sale. Ecommerce wasn’t that mature. This (time) we started six months before… came up with the whole plan. And it took everyone by surprise. People were expecting 5X, what we got was 30X (in 2014). Lot of the experience is clearly visible this time, everybody has learnt. Basically we are able to completely manage the scale. We didn’t go down at all despite huge volumes.
Jayadevan PK (JPK): There’s this conception that ecommerce has not grown since last Diwali… so is this event important for us to talk about and understand what is coming in the future?
BB: I think ecommerce growth comes from innovations, events and promotions — all are important. Ecommerce couldn’t grow since last year because only the event could grow it and there was no innovation happening. So both need to happen… events and innovations. In the last 6 months, since we are getting back on track, some innovation has started coming in and you will see over the next 12 months a lot more of it. We are seeing signs of market starting to grow — and this will help — but lot of innovations are needed.
PM: What are your expectations this time? Not necessarily talking numbers, but if we meet on 6th or 7th what would you expect to see?
BB: This BBD? I think in this BBD, the biggest focus for us was the end-to-end design around the customer experience… How many days do we take to deliver which order, to be segmented into which type of categories, which type of orders should go a little fast, which can go slower, we did a lot of work on that. We have reduced shipping times on average by 4-5 days and for high value items we have reduced it dramatically by 7-8 days… High value items will be delivered within 4-5 days. And then regular items are going to be faster than last time by 4-5 days. So that was a big focus area. Deals to har saal hoti hain (deals are there every year). This year there are a couple of What will be important is how many lives have gotten better? How many people have saved money, how many are living better?
If you take the telecom example, today anybody can talk to anybody, anytime. That wasn’t the case 20 years ago. Today we take it for granted. Technology is a big leveller. Getting billion people access to the same services is going to happen. It will happen in an India way, with an India cost structure. But it will happen for half a billion, billion people.
PM: In the Uber/Ola, Amazon/Flipkart battle, some people write off Indian rivals. Reasons given are that they (the foreign companies) have been doing it for many years and (have) capital. What do you make of those debates?
BB: It’s very early days in the market. Only 2% of retail is ecommerce. We haven’t really touched even 10% of the users. It is going to be exponential. First nine years have gone. The next nine are going to be very different from the first nine. You can’t extrapolate anything from the first nine to the next nine. Flipkart, Ola and other Indian startups need to think and act differently and they will. We are very agile and adaptive.
PM: I saw that — some very good innovations today. About testing phones… very local, there’s a lot of utility value.
BB: Exactly. Vo chodo, app size (leave that aside, look at app size). It is 80% smaller now. Just 5.6 MB. No other feature-rich app has that in the world. 2G pe chalao isko (run it on 2G), it works like a charm on 2G. Like, nobody has bridged that because duniya mein (globally) people are on Wi-Fi. And innovation will happen across the value chain, not just on mobile. Peeche supply chain mein bhi (innovation will happen in the backend, supply chain as well). How do you deliver it in the India infrastructure and how does it all work. What is the India version of Prime? That is yet to be seen. It’s not going to be free delivery convenience.
PM: When do we see that?
BB: We will see it when we do it.
JPK: How do you create that culture of innovation that you were talking about? Places like the ecosystems of the Valley are far ahead, they have access to early technology…
BB: See, technology is getting commoditised, right? The way I think about technology in India is… India mein itni saari problems hai (India has so many problems), right? Humaare paas kuchh bhi organised nahi hai, humaare yahan central reliability ki basic problem hai, har cheez mein (We don’t have anything in an organised manner, we have a problem with central reliability in everything), right? We are not in a market where things are very organised and there is a lot of competition and you have to really innovate from the bottom up on technology and only then you will succeed. In India, you need to take technology and apply it. There are two types of companies, one like Google, where you’ll build technology for technology’s sake and create the business model. Then there’s Apple, which will take technology, and integrate it. For India, that is the model to grow. Take the deep learning technology, take the image processing technology, all of that, and then apply it to an Indian problem. That is way more powerful. We need to do a lot more of that in this country.
In India, you need to take technology and apply it.
JPK: Within Flipkart, do you plan to accelerate the pace of innovation?
BB: Within Flipkart, that is one of the biggest focus areas for us and it takes a lot of strength. You need to take care of a lot of aspects around culture, aspects around goal setting, aspects around infrastructure. I mean people need to have the infrastructure to build, to innovate on top of, right? Then there are aspects around the way you basically prioritise what to do and what not to do and how to go about that. Innovation is also changing policies around culture, around performance management. We are laying out the groundwork for all that. For example, our data platform was not in great shape, and BBD helps a lot actually.
PM: You’ve got your own server farms?
BB: We’ve always had. Although I think the way to look at everything now is that — okay, these are 100 things we do, which out of these do we really need to do to add value? Is having our own server farms adding value to the customer or can we just work with Google or Microsoft? We’re going to ask that everywhere. That’s what applied innovation is, right? I would rather do that and free up those engineers and put them on to something which is more applied to the consumer.
PM: How have the past few days been for you? You are also a father now… so many changes. How have you been coping with all this? Sleepless nights?
BB: I think for BBD, the team has done an amazing job. Kalyan, Sai Kiran, Nitin — all the next level guys and everyone else has stepped up, and I actually didn’t have to do any sleepless nights. Let me be very candid and honest. The only sleepless night is this. I get to enjoy this.
PM: How do you paint your vision for Flipkart — and this question is more of a 5-10 year outlook question. I’m not even sure you’ll answer that question now, but then, from where you are, how do you see Flipkart over the next decade?
BB: I think the vision is still being written. I think it will be another 2-3 months (before) it’s clear. The next 10 years will be very different from the last nine for sure. And given our place in the ecosystem, the capabilities we have and will build, I see that the vision is to change — fundamentally change — three or four large industries across commerce, supply chain, shopping itself. We haven’t done much on the B2B side, and supply chain is obviously going to go slightly B2B.
Given our place in the ecosystem, the vision is to change, fundamentally change, three or four large industries
PM: So now you’re being Blue Dart?
BB: But we are bigger than Blue Dart, because only 5% of logistics is organised in the country, so there is nobody! Bigger than Blue Dart doesn’t mean anything actually. BlackBuck is going to be the biggest trucking company in two and a half years of starting up, so bigger than X or biggest doesn’t really mean much, because there is nothing out there. Toh woh e-commerce jaisa hai ke thik hai ek do saal mein aap sabse badi e-commerce company ban gaye. India Plaza tha (So that’s like ecommerce only, ok fine you became the biggest ecommerce company in one or two years, there was only India Plaza before that). So how does it matter that you’re bigger than India Plaza? It doesn’t really matter. What matters is, again, 5% is organised, how do you make it 30% over five years or 10 years… how do you develop the whole ecosystem to get the supply chain organised? We don’t want to do all that by ourselves, how can we drive the organised part of the market and make it more reliable, efficient .
So how does it matter that you’re bigger than India Plaza? It doesn’t really matter.
PM: We saw a good and bold move with Jabong. At Flipkart, you did it quite early before anyone else did… do you see a consolidation over the next year? A ‘winner take all’ kind of strategy in the market?
BB: Retail is never winner take all. I think India is not an ecommerce guy, it’s a retail guy. E-commerce is just a way of doing it. Whereas in other markets, it is an e-commercification of retail. Retail already exists, and 60-70% of that is organised, so everything is shifting online. What happened in those countries 30-40 years ago, we are starting it now. If you look at it from that perspective, retail was fragmented in every country, and that’s why local players generally won in retail. That is why even Walmart was successful where it made acquisitions outside of the US. That is why Amazon was successful in Germany and UK, where they almost started ecommerce, when they reached there in 1999.
So, it is very early days for us, and there is lot that is going to happen. Yes, Internet is more monopolistic, so it is going to settle somewhere in the middle. For us when we started Flipkart, it was to do something meaningful at that time. Now something meaningful means building an organisation for the future.
JPK: So it’s going to be a long battle?
BB: I don’t look at it like that. In the last 18 months, the market has not grown, so money has shifted a little bit. Amazon has so much share, Snapdeal has so much share and Flipkart has so much share. It is sort of an unnatural share shift. So, it is a bump in the middle of a long marathon, right! Suddenly thoda slow ho gaya (suddenly things slowed down a bit). But, I think it will start getting faster. And, I would be worried if we were not innovating and growing the market.
Now something meaningful means building an organisation for the future
PM: What about raising fresh capital?
BB: I think the stage where we are at, capital is not the biggest question. the stage we are at as a company, and also the stage the market is in, I think we have enough assets that we need to leverage and then see the need…
PM: So that would mean getting a strategic partner?
BB: On partnerships — it is about what strategic plan you have. And that is the most important question.
PM: So all this talk of Walmart investing in Flipkart — is it a case of all smoke without fire?
BB: Aag hai, dhuaan hai? Abhi toh dono me se kuch bhi nahi hai (Is it fire, is it smoke? At the moment it’s neither of those). (laughs)
Aag hai, dhuaan hai? Abhi toh dono me se kuch bhi nahi hai (Is it fire, is it smoke? At the moment it’s neither of those)
PM: So who do you look up to?
BB: I think it is hard to export retail models. You can export them to build niche places, which don’t exist at all. We have so much to do in this country. I would rather solve finance, supply chain, gross commerce, B2B commerce and services commerce.
The other shift happening today is localisation… see, earlier was on the desktop and it was about information. And with information, globalisation was easy. With mobiles, has shifted to transactions. Mobiles are always with you. Like Ola is changing the way you drive, the way you get transported. But mobile pe local has to be strong. Localisation is the new page rank. Local means, it should have payments integrated. Usme local aadmi service bhi dekh raha hain, woh bhi integrated hona chahiye (People are also checking services on that, so that layer also has to be integrated). Everything needs to be integrated to deliver a great experience. So it has to be locally built and locally delivered, because all local things need to be taken care of to deliver that experience. It is very hard to export that.
PM: Final two questions. How has it been for you and Sachin growing up as leaders, because I’m also a just-born rookie entrepreneur. What has been the main learnings and realisations?
BB: I think from the time we started until now, the values remain the same but the learning has been very humbling and quite crazy (laughs). As people we have changed a lot. One thing I have realised, or probably both of us have realised, is that real, like real real learning, happens when things are down. When things are down — that’s when you really learn and grow. During better times actually we don’t get to learn so much. For us learning has come from having been through that (the tough times) a couple of times. During good times, you have to make a conscious effort to learn. Otherwise you get into this feeling that it’s all good. What could go wrong? You know everything, so the feeling sets in…
The other thing that we’ve learnt is that you need to be extremely, extremely self-aware to keep yourself growing as a leader, otherwise again you get stuck very quickly. Because the rate of growth in internet companies is too fast and there are not too many mentors around in this country. That ecosystem still needs to develop, the mentoring ecosystem. So that is developing now but for people who started earliest, kiske paas jayenge (who do we go to)? Having mentors helps. Having an outside perspective helps. A good balanced perspective helps.
PM: Next year when we talk, and we will, what would you like to see?
BB: Next year, three-four things are important. One is that, I really want Flipkart to be seen as a place where customers get real value for money. Real quality at very affordable prices. I think we want to be known for that.
I think the second interesting thing would be to see how PhonePe changes the landscape overall.
Third is, how we make inroads into the supply chain landscape. In supply chain these are still early days so it’s hard to say. We will try 10 things and out of that three will work, and it will be interesting to see which three things work.
PM: It is an important company. I’ve tracked Infosys earlier and when you met Mr. Murthy, he would say, why are you guys after us. And similarly, I think in this period Flipkart is important.
BB: I’ve realised Flipkart needs to do that for the ecosystem as well. It’s a responsibility as well. I think you will see us shaping the ecosystem… The idea is that we hire really deep, very strong individual technology people. Really senior engineers with 15-20 years of just engineering experience. They can take any global technologies and apply it here; people who are working on like, four-five big applications of the technologies.
PM: Thanks for your time, thanks for this opportunity.
Subscribe to FactorDaily
Our daily brief keeps thousands of readers ahead of the curve. More signals, less noise.
Note: This transcript has been edited for clarity, brevity, and better readability. Disclosure: FactorDaily is owned by SourceCode Media, which counts Accel Partners, Blume Ventures and Vijay Shekhar Sharma among its investors. Accel Partners is an early investor in Flipkart. Vijay Shekhar Sharma is the founder of Paytm. None of FactorDaily’s investors have any influence on its reporting about India’s technology and startup ecosystem.