Building India’s Amazon: Flipkart CEO Sachin Bansal (Part 5)

Sramana: Internationally, the book industry is going through huge changes. Now that you have years of experience in the book industry, what are you hearing in terms of dealing with e-books and e-readers? Amazon expects that e-books will overtake paper books in the near future.

Sachin Bansal: I have been following that, but as I am focused on India I follow that news in terms of the Indian market. India is slower moving with e-books. It would take some time for India to use digital in the way the rest of the world does. The majority of Indians are not very tech savvy.

Sramana: The infrastructure does not exist. There is no ubiquitous pile of broadband like there is in the United States.

Sachin Bansal: That is one challenge that India faces. The cost of the devices are also too high for the Indian market. A book that is $30 in the United States will be distributed in India at $6 to $7 as a paperback.

Sramana: That is one of the reasons that I chose not do another deals with Hachette India, which published my first two books. I did not want to play that game. I produce high-quality content, and I want readers to pay for it. I am not willing to discount the price of the book that much. Hachette offered me a bad deal, so I turned it down. They were very angry about that.

Sachin Bansal: The per-capita income in India justifies the different book prices in India.

Sramana: The people who buy my books are making money. The software and technology industry employees in India make enough money to buy my book.

Sachin Bansal: It is a question of demographics, because those industries do get higher pay. If the target market is the entire populace, then it makes sense to price it lower. If the target market is one like yours, then there should be different considerations. There are other authors who are priced the same in India as they are in other parts of the world.

Sramana: I did not know the book business, so I played the game for the first two books. Once I learned the business, I changed the way I played the game.

Sachin Bansal: We are more than happy to sell your books in India!

Sramana: Let’s talk more about e-commerce in India. How has the ecosystem and market evolved in India when it comes to e-commerce adoption? How have the macroeconomics changed?

Sachin Bansal: When we first started we met with a lot of VCs. They all told us that India did not have enough buyers online to support e-commerce companies and that we should wait for buyers to come online. We just could not understand how VCs expected buyers to come online if there was nobody willing to sell to them. In my mind, the issue with Indian e-commerce is for the sellers to become better. If you try to copy a model from China, South America, or the U.S. you will find it does not work.

Sramana: What do you think is different about the Indian consumer as far as e-commerce is concerned?

Sachin Bansal: The main difference is trust. Indian consumers are more cautious buying online. They were burned a lot when the first companies came out seven years ago. Building a service which people can trust and enjoy is very important. It is not like opening a street shop. With e-commerce you are asking the consumer to trust you with their money before they even see the goods. That has not traditional in India.

Sramana: What you are describing happened in the U.S. in the mid-1990s when Amazon.com started. The notion of giving a credit card to a website was foreign to the consumer, but now it is normal.

Sachin Bansal: Yet the U.S. had an advantage because e-commerce is an extension of mail order. That was a huge industry. People were OK sending money knowing they would receive a product. The mail order industry does not exist in India and people do not have a lot of money to spend, so they buy very cautiously.

This segment is part 5 in the series : Building India's Amazon: Flipkart CEO Sachin Bansal
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