Building India’s Amazon: Flipkart CEO Sachin Bansal (Part 3)

Sramana: How much money did you put into acquiring inventory to sell?

Sachin Bansal: They had computer systems which maintained inventory of their stock. We received a download of that every day.

Sramana: So you were taking orders online and then going to the suppliers and fulfilling orders from their warehouses?

Sachin Bansal: We would just pick the books up at their warehouse, but we had to take them to our place to pack and ship them.

Sramana: In terms of working capital, however, you did not have to buy an initial inventory.

Sachin Bansal: If we had to buy that inventory it would have taken a lot of working capital.

Sramana: Were you able to get the entire inventory of both suppliers listed on the Flipkart website?

Sachin Bansal: Yes.

Sramana: That is very resourceful maneuvering and a good example for Indian e-commerce. How did you acquire customers for the front end of the website?

Sachin Bansal: Customer acquisition was a challenge. We did not have a clue what we were doing there. At that time our only philosophy was to provide good customer service to entice customers to return, and that did start happening, but growth was slow. We studied other website around the world and a big thing that came out was the need for us to solve SEO. Any online business has to solve that to be successful.

We taught ourselves how to do SEO, and we learned Google AdWords from scratch. We were able to drive a lot more traffic to our site. A lot of people just continued, but some customers did make a purchase and tried out the service because our costs were so low. Once they tried us out, they continued to use us.

Sramana: How did the business ramp up in terms of sales?

Sachin Bansal: The first three months were very tough because we would sell only about five books a day. After the first three months business started picking up because of word-of-mouth advertising. We hit our breakeven point in six months. It was still just the two of us, but we were still working out of the house so that is when we finally found ourselves and office. We also hired our first two employees. One job was to handle the operations and to pick up the books so that we did not have to do it ourselves every day. The other handled marketing initiatives. Both are still with us today.

Sramana: What was your 2008 and 2009 revenue?

Sachin Bansal: Our revenue in March of 2008 was quite low. Our March 2009 revenue was about 2.5 crore (~$560,230).

This segment is part 3 in the series : Building India's Amazon: Flipkart CEO Sachin Bansal
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