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FEATURES/Boardroom | Jul 6, 2012 | 271237 views

Can Flipkart Deliver?

India's top e-commerce website is betting big that "customer delight" will lead it to success. But costs and management issues could play spoilsport
Can Flipkart Deliver?
Image: Namas Bhojani for Forbes India
Sachin Bansal(left) and Binny Bansal

L

et’s put it this way. Sachin Bansal and Binny Bansal have audacity and balls.

If you think of these as virtues, what you get are friends who grew up together, studied at the prestigious Indian Institute of Technology, Delhi (IIT-D), are now around 30, and in five years built Flipkart, India’s largest e-commerce company.

This financial year, they expect to show investors Rs 2,500 crore in revenues, a 400 percent growth over last year’s numbers. They sell 17,500 items each day—or 6.5 million items annually. Nearly 5,000 people, including contractors, work for them. Their closest competitors make do with 700-800 people.

But if you’re the kind who think of audacity and balls as the foundation on which hubris and foolhardiness are built, then Sachin and Binny Bansal’s Flipkart begins to look like an entity skating on thin ice. What lends credence to this view is that it is shared by General Atlantic Partners, the world’s 12th largest private equity firm with over $17 billion in investments.

The view was cemented late last year when Sachin and Binny travelled to New York with a single point agenda: Convince General Atlantic Partners’ investment committee to invest $150-200 million into Flipkart at an overall valuation of somewhere between $750 million to $1 billion.

After three rounds of meetings with multiple committees, including ones with Martin Escobari, a managing director at the firm specialising in online commerce, and William Ford, the CEO, they all declined. Why? They couldn’t understand all of Flipkart’s accounting strategies or its numbers. How much, for instance, was it using shareholder’s equity to fund operating losses? Just what was the true cost of ‘returns’ for the company?

More importantly, they figured that at the pace at which Flipkart was building Infrastructure and adding people, it would need at least $2 billion in annual sales to just break even. Getting to that number, they argued, would take an awfully long time given where Flipkart was back then.

Though it remains unstated, Flipkart’s goal is to be the Amazon of India. But that may be a chimera. Amazon relied on the funds from its 1997 initial public offering (IPO) to tide through the aftermath of the dotcom crash that took out most of its rivals. Without competition, it could afford to lose money on building infrastructure. It would take $2.8 billion in losses over six years before it declared its first quarterly profit in January 2002.

When faced with these posers, Sachin and Binny didn’t have answers. They took the flight back home to Delhi. Disappointed, they had no option but to go back to their existing investors: Tiger Global, their long time sugar daddy, and Accel Partners.

Hedge fund Tiger Global and Accel too had been looking forward to the deal, because that would significantly increase the value of their own Flipkart stakes.

Sources say even the term sheet the Bansals carried with them to New York was drafted by Tiger Global. Now that Sachin and Binny were on the back foot, they were told Flipkart was, at best, worth not more than $500-600 million. And that $100 million was the best Tiger Global and Accel could put on the table right now.

Flipkart refused to comment on any of its investment deals or discussions.

When Flipkart was founded in 2007, it was on the back of a fanatical promise. Whatever be the cost, delight customers. Starting with books, a market it upended in little time, Flipkart started to offer CDs & DVDs, mobile phones, consumer electronics and more recently, healthcare and beauty products. Their fanaticism won over two million sceptical Indians.

To get them to Flipkart, though, the Bansals invested venture capital funds into infrastructure that could support customer service, last mile delivery, warehousing and technology. They spoilt their customers silly by offering them the option to pay cash on delivery (CoD) if they didn’t have credit cards or were uncomfortable using them online, heavily discounted prices, free delivery and later, no-questions-asked returns.

It was a model they’d imported from their multiple visits to China, a country which they thought had problems similar to India: Large population, poor transportation, low penetration of modern retail, unreliable third-party logistics and few credit card transactions. Chinese e-commerce vendors had gotten around the problem by creating infrastructure around each problem.

Flipkart thought that was the way to go. Instead, they were gobsmacked by even worse ones. With CoD, cash flows are controlled by courier companies. It takes weeks to reconcile accounts and they charge fat fees as well. To get around this, the Bansals started their own courier firm.

But as the division grew, they realised efficiencies could come only if deliveries from warehouses were streamlined. But to do that, inventories ought to be in stock. Meanwhile, thanks to CoD, fickle customers often changed their minds at the time of delivery, in turn leading to growing returns.

That posed an altogether unexpected question. How do you fund the delivery and logistics business? The solution: Flipkart Logistics, an initiative that started off as a pilot in December 2010 to handle the company’s in-house orders, but would grow over time to become a platform that could offer warehousing, packaging, delivery and CoD to any company for a fee. (Flipkart denies it was ever a consideration).

Can Flipkart Deliver?
Image: Namas Bhojani for Forbes India
(L-R) Ravi Vora, VP marketing; Karandeep Singh, CFO; Sujeet Kumar,president, operations;Mekin Maheshwari,president, engineering

Today, with over 60 percent of Flipkart’s 4,800 employees spread across 40 cities, Flipkart Logistics is the tail that wags the dog. The food that sustains this growing entity is inventory. Book distributors talk of Flipkart buying books from every single title in their catalogue. They were surprised, because many of those titles hadn’t sold in years.

A category-wide 30-day returns policy and aggressive inventory acquisition put more pressure on the system to handle returns. At least three industry sources claim the company has attempted to return 30-40 percent of books they had bought a year ago to a few distributors when the norm in the business is 10-15 percent.

In mobile phones too, where most of its peers prefer close back-to-back arrangements with distributors, Flipkart prefers to hold its own stock. Some distributors are now complaining of delays in payments. Flipkart maintains these delays are because the software it uses to maintain financial records are being updated.

On February 9, 2012, everybody, insiders included, was taken aback when Sachin Bansal announced Flipkart’s acquisition of Letsbuy.com. A rival e-commerce website, it sold consumer electronics. He said it would allow Flipkart build a dominant share in the space.

Since the time it started operations in 2009, Letsbuy deployed heavily discounted prices and extensive product catalogues as strategies to acquire market share. By January 2011, it had enough heft to convince Helion Venture Partners, Accel Partners and Tiger Global to invest $6 million.

But it burnt nearly all of it in less than a year. By the end of the year, it started knocking on investor doors for a fresh round of funds. Nobody uttered a peep. Instead, co-founders Hitesh Dhingra and Amanpreet Bajaj were told by Tiger Global and Accel to sell their business to Flipkart. From an investor’s perspective, it made no sense to fund two companies competing in similar spaces. The Bansals were told much the same thing and had no option but to acquiesce.

In a few months, practically all of Letsbuy’s 350 employees were quietly let go and its infrastructure, including the warehouses, dismantled. Accel and Tiger Global, however, salvaged all of the cash investments in Letsbuy and got additional stock in Flipkart.

“This was a great business decision and we stand by it. Tiger had nothing to do with it,” says Karandeep Singh, Flipkart’s CFO.

All of this, in turn, raises a question: “Who owns Flipkart?” People privy to the financials say Tiger Global is the largest shareholder in the company and owns at least 40 percent on a fully diluted basis. Add to this Accel’s stake and you’re left wondering how much the co-founders Sachin and Binny Bansal actually own. “Flipkart today is an investor-owned and investor-driven organisation,” says Tapan Kumar Das who was the company’s vice-president, finance, for a year until April 2011.

It’s interesting how things got here. Towards the latter part of 2009 when monthly sales were in the region of Rs 1 lakh, Abhishek Goyal, an associate at Accel Partners, noticed Flipkart and put it on the firm’s radar.

Sachin Bansal, who by then was clearly the company’s brains and CEO, demanded the company be valued at Rs 16 crore. Venture capitalists balked at the figure. Much dithering later, Accel invested nearly $1 million (Rs 4 crore then) in the company, but in two equal tranches. Accel’s Rs 2 crore into Flipkart’s bank account was a personal victory for Sachin.

The funds were deployed immediately and the results were spectacular. Monthly sales skyrocketed and with them, Sachin’s expectations. He started to look at Accel’s $1 million as chump change and initiated conversations with others as well.

Even as many were evaluating and debating, Lee Fixel, a managing director with Tiger Global, a deep pocketed and canny hedge fund, swooped in to invest $10 million at a valuation of Rs 220 crore. The speed at which it happened blindsided everybody, including Accel, which until then had invested only 50 percent of what it had originally committed to. Left with no choice, it was forced to invest the remaining amount at a much higher valuation before getting relegated to the backseat. This, because it didn’t have the muscle to write cheques of the kind a hedge fund could. It chose not to participate in Flipkart’s second and third rounds of investment, leading to a further dilution of its original stake.

At Tiger Global, the 29-year-old Fixel was closer to the Bansals in age and outlook. “Our philosophy was to find investors who don’t want to run the business and the biggest thing Tiger brings to Flipkart is independence and belief in the management,” says Binny Bansal.

Tiger Global was started in 2001 by Charles ‘Chase’ Coleman as one of the numerous “baby Tigers” founded by the alumni of Julian Robertson, legendary investor and founder of hedge fund Tiger Management. Its investment sweet spot is the phase between the first venture funding for a startup and it going public. So, it prefers to let local venture capitalists spot promising companies by making the first investment, before opening its purse strings.

Some call it investing in regulatory arbitrage, because it allows Tiger Global to acquire stakes, understand the real metrics of private companies, and then sell them to the public through an IPO just before that advantage disappears.


mg_65730_flipkart_one_280x210.jpg

There are precedents to this where Tiger Global investments “pop” on the day of the IPO, only to fall back to more realistic levels. These include Youku.com (the YouTube of China, down 35 percent), Yandex (the Google of Russia, down 49 percent), DangDang (the Amazon of China, down 79 percent) and Gushan Environmental Energy (Chinese biodiesel producer, down 96 percent).

Some of its investees have turned out to be much worse. Trading in China’s Longtop Financial Technologies was suspended by the New York Stock Exchange (NYSE) after an accounting fraud. This is not to suggest Tiger Global makes only risky investments. It has invested large amounts in high-profile companies like Facebook, LinkedIn, Apple and Google.

But when companies have to deal with conflicts of interest, it is usually the board that asks hard questions. According to Flipkart’s official filings, the only other person on its board—other than the Bansals, Accel’s nominee Subrata Mitra and Tiger’s Fixel—was Rajesh Magow, CFO of online travel company MakeMyTrip.com.

But Tiger Global owned nearly a fifth of MakeMyTrip when Magow was inducted into the board. Magow chose not to respond to a request for an interview. Sachin Bansal declined to talk as well about the composition or function of Flipkart’s board. It is “a private matter,” he said.

The schisms at Flipkart run deep and offer lessons on how not to expand a well-funded startup. In December 2009, after its second round of funding that got Flipkart Rs 50 crore, Sachin and Binny embarked on a series of hires to man key functions like finance, category management, marketing and human resources (HR).

Vasudha Mangalam came in from a technology company to eventually lead HR. Vipul Bathwal, a 2008 IIM Ahmedabad graduate, came on board to identify newer categories. Satyarth Priyedarshi, a former head of merchandising for the Borders bookstore chain in Dubai, was roped in to head buying and merchandising. Tapan Kumar Das, the erstwhile finance head at venture-funded salon chain YLG, joined as VP, finance, along with Anupama Sharma, a Stanford Business School graduate who would lead marketing. Within a year, all five quit.

Soon after Vipul Bathwal came on board, he identified mobiles as a category and launched it in July 2010. This was the company’s first big category expansion after books and CDs/DVDs.

Within the first quarter, sales rocketed to around 30-40 percent of Flipkart’s overall revenue without marketing support.

Sitting in Delhi, Sujeet Kumar, the head of Flipkart’s operations, nervously studied the rapidly growing mobile category and its implications on power equations at the firm. Kumar was a year senior to both Bansals at IIT-Delhi and more importantly, a fellow-resident of Jwalamukhi hostel with Sachin.

“Jwala”, as it was called, was one of the 10 student hostels on the IIT-D campus. Unlike many other IITs where students changed hostels during their four-year engineering stay, IIT-D insisted they stay in the same one. This helped forge close networks and deep bonds that often lasted a lifetime between residents. Allegiance to a particular hostel meant friendships with others from a rival hostel was frowned upon.  “We hated the sight of anyone from Niligiri [one of the hostels],” says a person from the same batch as the Bansals, and an erstwhile resident of Jwala. “The first thought that crossed our minds when we came upon one was to bash him up!”

It was in this testosterone and allegiance-driven community that Kumar found his true calling. Though from the unglamorous civil engineering stream, he was politically active on the IIT-D campus. Working tirelessly behind the scenes, often over tea, cigarettes and alcohol or long sessions of card games, Kumar would broker deals and negotiate allegiances to further Jwala’s causes. As opposed to him, Sachin was an introvert who preferred to spend most of his time within his room. Which is perhaps why soon after starting Flipkart, Kumar was one of Sachin’s first key hires.

Flipkart’s logistics were a natural foil for Kumar, playing to his inherent skills with numbers and people “management”. As he scaled Flipkart’s back end operations, Sachin’s trust in him grew. Soon, Kumar started to get in newer people like Maneesh Mittal and Anuj Chaudhary into the team, all from his network at Jwala. “Sujeet built his operations team with people he trusted. That was at a time when Flipkart was very small. So, it was easier for him to get people he knew from Jwala,” says Binny.

Together with the Bansals, they banded together as a secretive bunch that decided which way things went. “They would talk and share information only with each other. There was no openness in the system,” recalls Das. That perhaps explains why Flipkart did not have a formal stock option programme till late 2010 when it commissioned ESOP Direct, an Indian specialist firm, to design the first version. Only a handful of loyalists were given stocks till then.

An ex-employee recalls asking Sachin about consulting with a professor from IIM Ahmedabad known for his expertise in helping startups scale successfully. “Those IIM guys will just steal our ideas!” was Sachin’s response.

It was this mindset that eventually contributed to Bathwal’s fall. Sujeet Kumar detested the outsider and the thought of being sidelined was terrifying. So, Kumar started digging to find Bathwal’s Achilles heel. He struck pay dirt when he stumbled on the fact that in his eagerness to grow the category, Bathwal had aggressively bought large inventories of mobile phones from distributors.

How much inventory to hold is one of the toughest questions retailers deal with. Having thin stocks carries with it the risk of turning down orders; too much of it and there’s the risk of unsold goods. But Bathwal reasoned he was better off with larger inventories because Flipkart’s stated mission was to delight customers. Instead, he found himself staring at large inventories—a problem Flipkart was intimately familiar with as well.

Can Flipkart Deliver?
Image: Dileep Prakash for Forbes India
HOME BOUND Most of the people that the Bansals hired and trusted were their friends from their IIT-D hostel, Jwalamukhi

But with this information on hand, Kumar called Bathwal on the phone and told him “You have a dead stock situation.” Bathwal protested. “We can return it to the vendors.” 

A few days later, Sachin and Binny Bansal called him for a meeting. “Sujeet is now going to head all our categories and doesn’t want you to report to him.  I’m sorry, but he is my senior from IIT-Delhi,” said Sachin. A week later Bathwal put in his papers. It was much the same thing with the others. The Bansals trusted only their investors and a handful of colleagues from their IIT days. The others were dispensable outsiders.

Das says he was frustrated after being stonewalled every single time he tried to get clarity on the finances. In spite of heading the function, he was unable to find accurate numbers on sales volumes. In one instance he found Anuj Chaudhary, another “Jwala” alumnus, had hired a finance person into his division without so much as informing him.

mg_65774_flipkart_new_280x210.jpg

Then there was Mittal, an aggressive and abrasive “Jwala” alumnus, with a take-no-prisoners approach. “Five to 7 percent of the book sales were based on cash. I wanted to know from Mittal why vendors wouldn’t accept cheques. But I got no answer. It’s possible Sachin and Binny didn’t know about these deals though,” says Das.

Mittal, we were told, was on a sabbatical when a request for his version of the story was placed. Two weeks later, Mittal was taken off the rolls. No reasons were provided.

Das adds he also found a mismatch between Flipkart’s sales receipts and bank balances in his early days. Ernst & Young’s 2011 annual audit report of Flipkart’s accounts had also raised at least two “qualifications”. Qualifications in audit parlance refer to notes or comments made by an auditor indicating their displeasure with something in a company’s books. In Flipkart’s case, the qualifications were around the company’s internal control and reporting systems. It is not known if those qualifications, or others, were present with the next year’s accounts.

“Back then the company was growing so rapidly that it’s possible there may have been some lag between the two,” says Sachin in Flipkart’s defence.

Das says he resigned in April 2011 before having to put his name on Flipkart’s balance sheet for the year gone by. “If I had to put up with so much of pain around finance, I might as well have done it for my own company than as an employee for Flipkart,” he says.

“Are you going to put Das’ name next to all these allegations?” Sachin asks me during an interview in which Binny and CFO Karandeep Singh were present.

“Yes,” I tell him.

“Hmm!!!  Usko toh dekh lenge [We’ll deal with him],” he says to Binny, before being pacified by Singh to let matters rest.

“An IPO will be an unnecessary evil for us. Today, there is so much of private capital available that we’d like to stay private for as long as possible, like Facebook,” says Binny Bansal. But truth is, Flipkart started evaluating its options way back in 2010 by first studying the regulatory environment in the US, Mauritius and Singapore. Listing in India was out of the question, given SEBI’s regulations around generating profits first.

The appointment of MakeMyTrip CFO Magow to Flipkart’s board is probably the best indicator of how its IPO will pan out. Magow was the architect of MakeMyTrip’s US IPO using a holding company structure based out of Mauritius.

Last year, Flipkart floated a company in Singapore, Flipkart Private Limited, which spent Rs 323 crore earlier this March to acquire shares in Flipkart India Pvt Ltd, a subsidiary company incorporated only in September 2011. It’s hard not to consider that as part of the run-up to an IPO next year. But it will raise questions the Bansals have been ducking until now, starting from the ones raised by General Atlantic Partners.

Flipkart also has to fight off aggressive competition from the likes of Infibeam.com, Homeshop18.com (owned by Network 18, Forbes India’s publisher), Snapdeal.com and Indiaplaza.com. In books, for instance, Flipkart has over the last few months started raising prices across the board.

Which is why, it will be interesting to watch how the hypothesis that puts serving customers over everything else holds up. On the other hand, Flipkart’s competitors too cannot endlessly burn the same fuel it does, venture money, to buy market share.

 “If consumers buy only for cheaper prices, free delivery, free returns and free CoD… then the question is, will anyone ever make money? I don’t think anyone has a good answer to that,” says Kanwal Singh of Helion Partners.

Flipkart is also moving fast to launch apparels and has hired senior people to spearhead the effort. This category is crucial for Flipkart because at 30-40 percent, it has much higher gross margins than books (where discounting has wiped most margins to single digits) or electronics (6-8 percent). Ironically, the current market leader in apparel is Myntra, which has Accel and Tiger Global as investors.

Finally, there are the ‘softer’ issues around culture. After stymieing the first set of professionals who joined in 2010, Flipkart has gone back and hired a second set of people, in most cases even more experienced and senior than their earlier hires.

These include Karandeep Singh, earlier a vice-president at Sapient India, as  CFO; Ravi Vora from Heinz India as head of marketing; and Aparna Ballakur, who formerly headed human resources at Yahoo! India.

Singh is now implementing Oracle Financials, the first major enterprise software Flipkart has chosen not to code from scratch. Why now? “This is a big investment and we had to reach a stage where it could be justified,” says Binny.

Meanwhile Ballakur will need to walk the fine line between bringing in a more professional and open work culture while retaining the good aspects from the old. Why did Flipkart wait so long? “We’ve been looking since 2009, but just didn’t find the right person,” says Sachin.

“It’s typically an investor who puts pressure on start-ups to professionalise or scale. It’s a tough transition,” says Priya Chetty-Rajagopal, of global executive recruitment firm Stanton Chase.

What the Bansals need to add now is humility and, perhaps, dilute their audacity and ballsy ways to stay afloat.

(Additional reporting by Shishir Prasad & Pravin Palande)

This article appeared in the Forbes India magazine issue of 06 July, 2012
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Comments (128)
Nirmal Mangal Sep 21, 2014
I just started to follow flipkart story just a year ago, but I strongly believe that this article have done a great help to the company and now see where is FK. Kudos. Biggest loser here is General Atlantic Partners just losing 2 Billion dollars in 3 years lol.
Manish Aug 7, 2014
Rohin Dharmakumar, What will you say now...
Chennaite Aug 5, 2014
flipkart has built a solid platform and a impeccable image, so amazing so that I could hardly believe that this is an Indian company; an Indian company that could take on a much bigger multi billion dollar Amazon and give them a run for their money.

There is distinction in the way FK runs their service; which I could not exactly point out but definitely lacking in their competitors, SD and Amazon. Have no doubt, FK is here to stay and stay strong.
Response to Chennaite:
Sourabh Aug 7, 2014
You should read this first http://qr.ae/4Zy5y
Ravi Jun 3, 2014
Answer to the headline: Yes, in One Day!
-From a Flipkart shopper
Suyash Dec 5, 2013
Poor article. Extremely biased and the desperation for attracting eyeballs through creating controversy is dripping from this. Its a huge disappointment from Forbes India. Never expected such a low-level of journalism from such a name.
Sirish Aditya Dec 4, 2013
The content's rather interesting but the writing's plain bad. Names are all over the place and there is no cohesiveness to the story.
I am not being critical but longform writing is in itself an art and if not done well, instead of being insightful, ends up being a mess of information like here.
Hari Rastogi Oct 12, 2013
Action must be taken by competition Commission of India or by some govt outfit against the online retailers who are using flaw in the law and playing a big GAMBLE to capture the entire market by selling below cost price for their initial years. When VC funding is not allowed in E-commerce these companies are registering offices in Singapore etc and routing the money for the same business. Is it not a mockery of our system ? when VC funding in retail is not allowed their is a daily news of $XX million funding to so and so e-commerce company. DUH! they are obviously not using funding just for their platform but to run business in losses to kill competitors and physical retailers.

It's like one sided competition by misusing the VC funding to sell below cost price and with huge operating losses by these handful of online retailers...
Amara Krishna Sep 5, 2013
The following are the folks in Flipkart who just have too much power and run it like their fiefdom. External folks just cannot survive in this company - folks who feel it is a nice company, please join it and work with these folks

1. Sujeet Kumar (already article speaks about him)
2. Amod Malviya
3. Mekin Maheshwari
(2 and 3 are 2002 engineers with no great achievements - somebody like bannerjee with 25 patents had to leave because these guys run the show)
4. Vaibhav Gupta known as VG - senior of Bansals - his people skills are in the - range
Poonam Agrawal Aug 22, 2013
Good article, the indepth analysis of ecommerce, its interesting how the Company will sustain investor pressure and at the same time deliver value to customers.
Response to Poonam Agrawal:
Amit Gupta Sep 2, 2013
Yes.. very nicely written.. but we still prefer the companies who have not even received funding and doing really well. As they don't need to depend on the mercy of Investors. Such examples are Craftvilla, and www.Dress365days.com
Narik Aug 21, 2013
very right article. This company flipkart loses 75 CR per month. Wonder why investors put in more money

Pathetic work environment - where only friends of the bansals survive. If you rub anyone in the core group in the wrong way, you are on your way out
Amar Aug 21, 2013
Characteristics of Flipkart as a place to work for:
a) "Bansal" Company - all the friends of the Bansals are VPs
b) Ankit Nagori is a BTech 2009 who is VP, IIMA grads from the 90s batches are directors reporting to him
c) Vaibhav Gupta was working in trilogy till 2005 as IC. went to do MBA and returned in 2007 as IC in Mc Kinsey. He is made VP in 2011 directly and has SAP VPs reporting to him as director. He is senior of the Bansals in college from same hostel
c) Sujeet Kumar is president of flipkart. Already known senior of Bansals in hostel. Less said about his credentials the better
d) Anuj Choudhary was another person with similar credentials as above

In the company unless you belong to the "Bansal circle", you are likely to be fired. So many senior people get fired here.
If you are an employee don't join or dream of joining this place
Anandm Aug 8, 2013
After some time, there will be consolidation in this e-commerce sector. Even though market appears big enough, competition is in same metros and same products. Discounts becoming the major differentiation, it will become dog eat dog market, forcing weak players to either sell or close.
Aditya Jul 12, 2013
Has anyone pointed out to the fact that Forbes might have a conflict of interest in this report based on the fact that Homeshop18, Flipkart's competitor, is owned by the same house that also owns Forbes?

*I'm sure this will be moderated. If it doesn't, please remove this part of the comment.*
Response to Aditya:
Rajesh Sep 11, 2013
the fact that your comment has been published shows that forbes is open.
Flipkart fans should learn to be objective. There are many things nice about the company but it is a terrible place to work for senior hires. No wonder most outside hires leave within 1 year
Response to Rajesh:
Biased Views- Both Ways- For And Against Oct 14, 2013
the sole basis of addressing comments (opinions) seems to be this article.

Rather people would do better to know 'live' realities from at least one current or ex employee or a customer or a vendor.

situation could be better or worse than as portrayed by this articles.
nothing against or for any entity per se (including Forbes, Flipkart, Amazon India, fashionara, spoilmytrip or any other entity)
Sunandita Jul 9, 2013
Extremely biased article. At least these guys (flipkart) had the 'balls and audacity' to come up with something when others couldn't. For that we should give it to Flipkart. All said and done, people know this brand at one go, while other e-comm brands are forgotten....so hats off to flipkart
Rahul Jul 6, 2013
They can deliver anymore. There was a time when they did, but no more. my response is late though but my case is a recent example of flipkart shifting its goal posts again and again.
Response to Rahul:
Rahul Jul 6, 2013
A small correction "They Can't deliver anymore."
Deelip Khanal Feb 20, 2013
The solution is very simple. They don't they buy Myntra. With the high margin on Myntra stuffs like said in this article, they'll most probably get it right. And it shouldn't be hard for them to acquire Myntra as Tiger owns it. Didn't you say Tiger just 'told off' letsbuy to sell to Flipkart?
Varadhan Feb 20, 2013
This article definitely has an anti-Flipkart bias, which evident right from the beginning of the story, till the very end. A magazine/media firm should first have the basic qualification of being non-judgemental/unbiased about the subjects that they publish. They have to gather the facts and create inferences based on these numbers/facts, but not take it as an opportunity to gloat their own opinions and whimsical imaginative ideas. Sure, there may be problems with Flipkar as the case with ANY firm, not only the new startups but even the well established. I would have respected the author/editor version but for their choice of words, and taking this as an opportunity to vent their own feelings of what Flipkart must do.

Coming to specifics:
About recruiting IIT-D Jwala inmates into the firm: there's nothing wrong in recruiting people you know from school days, and moreso if you know them well in person. A new startup needs deep sided personal commitment, and can definitely come only through a personal feeling of relationships. And this is common across all industries: More pharsis in TATAs, more south-Indian Brahmins with TVS group of companies, and mostly IIMs graduates in the top FMCG companies of India. Successful alumni love to recruit more folks from their alma-mater, and more so from some know sources of networking. This is pure common sense, no a scheming strategy!

About investor run company, of course, any firm is finally dicated by the Board and the investors. The A,B,C,D of MBA will teach that the basic premise of a management team/company is to create growth and value to its investors/shareholders. And for a new startup, it is absolutely likely that the primary investors prefer to have greater oversight abilities in the course of the firm, moreso, if they are invested in a few peer companies in the same market. Again, this is pure common sense, and nothing to post as mal-practice or a Eureka! moment discovery by team Forbes.

About internal HR issues (team wars/power struggles), tell me one professional firm where this is not the case! Take any company, business division, conglomerate across anywere in the world, aren't there power struggles, power groups and each group trying to get the better of the other? Effective Leadership is using this game (yes I call it game, because this is just that!!) more fruitfully for the entire company. And that level leadership take time to be incubated. But, trying to pose as if power struggle is only in Flipkart is a naive understanding from team Forbes.

Reporting about Kumar's hostel-days negotiations over tea, cigarettes, alcohol and card games is a good attempt by the author/editor to include an 'item song' like feature in the article. Sometimes the 'item songs' become quite famous to pull audience to the masala movies, and the article is freshly sprinkled with abundant traces of this. Good attempt.

Last but not the least, this article raises serious doubt in my mind about the "conflict of interest" since Forbes India's parent firm is Flipkart's competition. Too many biased opinions, too many common sense events bloated as evil designs, and a bad choice of adjectives does seem to hint if there could be an ulterior motive to this article. Anyways, the market will decide Flipkart's strategy and the outcome of their hardwork, not such articles as these... and as one of the many customers of online shops, I am more interested to know about team Flipkart through their performance than any masala articles!
Good show!

Disclaimer: I am just a customer in the India market space using online megastores, neither in the past nor in the present am I professionally linked with any of the online shops, including Flipkart.
Response to Varadhan:
Rawb Aug 23, 2013
Suggest you join this highly-improfessionally-MISmanaged organization and then comment on people's reviews who have worked with them.
Response to Varadhan:
Kartik Sep 5, 2013
well - it is much higher than similar firms.

The company is extremely unprofessionally run. Recommend you work here or talk to ppl working here at senior levels before passing such comments

It is not a professional company to work for - see glassdoor reviews
Old Timer Feb 4, 2013
hmmm.. As a rank outsider this article indeed is interesting. I know the ecommerce market well. The global ecommerce market also faced several challenges and the Indian ecommerce market is facing even more to say so! Despite that brands like flipkart, myntra and firstcry.com did well to establish their brand. I am not talking about finances here as it is evident from the article that breaking even is a huge challenge, forget posting profits.

One thing I can vouch for is that from my experience of interacting with IITians from Kanpur, Kharagpur, Chennai, Mumbai and Delhi ( during my MBA from one of the IIMs) the non-IIT and non- IITD crowd there generally had problems with the guys from IIT-D. For one they have a ghetto mentality, used to still move around as a single group even after coming to an IIM, had problems with others because they considered themselves smarter than others, were arrogant and brash.

I see a similar behavioral streak in these guys ! But they were very ambitious, had a dogged fighting spirit and are doing good for themselves. I agree completely with this article- to grow big a company needs a culture and that culture can be set only by the top management. And looks like flipkart's top management is young, naive and immature to say the least to build a good culture. They are smart, very intelligent and highly successful atleast for now- but to sustain that success- maturity and adaptability is a definite pre-requisite.
Amits Jan 24, 2013
Fantastic eye-opening article! I actually managed to partly verify some of the things through personal connections. Never thought of these aspects but guess the rosy picture is not so rosy behind scenes.
Sakthivel Jan 22, 2013
Highlighting only the negatives, your proved its Forbes (INDIA).
Biased Article
Response to Sakthivel:
Sharan Sep 11, 2013
they have highlighted positives and negatives.
Sensational stuff that no one knew before the article was published. Atleast prospective employees can read this to understand what to expect before joining a "lalla" company like Flipkart
Vinay Jan 12, 2013
Poor Editorial

Its not fair on Forbes part . Clearly looks like biased Editorial
Vijay Jan 7, 2013
I think the article is very biased - didnt think Forbes will stoop to this level. It seems the writer has some grudge with the bansals and dont think that is a very professional. Isnt there also a conflict of interest ? homeshop 18 is owned by the same company that owns forbes ?
Manoj Dec 28, 2012
Quite informative an article, but the tone and content show the writers' extreme bias - and it's shocking Forbes editors missed it. Especially the slur on the investors - Tiger and Accel have invested in several IT based startups, so why not this? Nor am I so impressed with astuteness of US VC's about India that I can accept their valuation, though I agree that in retailing, overheads are the secret deathknell. Whether Bansals will have the last laugh? I think so, but only time will tell. Suffice to say that if Flipkart were to make a public offering, I dont think they would go home short-charged.
Ajith Edassery Dec 5, 2012
Does it mean that the likes of jabong, myntra, flipkart, infibeam or snapdeal could be doomed soon?

I think the government should look into the matter immediately before these kinds of e-stores mushroom in an uncontrollable fashion.

Good article!
Response to Ajith Edassery:
Aniruddha Deshpande Dec 15, 2013
Government should look into the matter? What has the government got to do with it? If a set of privately run companies close for not making profits, why should the government step in?

What is the problem if such e-stores "mushroom in an uncontrollable fashion"? What potential public harm do you forsee?

PS: have you heard of an open market? Hint: your country has one.
Response to Aniruddha Deshpande:
Ajith Edassery Dec 15, 2013
Hello Aniruddha,
My comment was in reply to the comment below (Ajay and Kumar) regarding FDI in retail and the funding nature of these online stores in India by floated companies in Mauritius, Singapore etc. The comment unfortunately didn't appear in proper threaded hierarchy.

Best...
Ajith
Ajay Nov 25, 2012
If FDI in retail is not allowed yet then how come online sites like Flipkart, jabong are working when most of their investment is from foreign? they are offering heavy discount because of foreign money. Why no question is raised on this front?
Response to Ajay:
Manoj Dec 31, 2012
I dont think it's anyone's case that FDI is bad, while domestic investments are good. These are just mechanisms - what is important is that any investment should result in economic growth of india. Yes, our experience has been that pliable governments and poor justice system have resulted in many earlier investments turning sour for the country (Enron's Maharashtra project in 1990's is a good example of how Indians (banks, DII's) lost INR 4bn under the guise of FDI ). Unfortunately such decisions are becoming more acidic because our present leaders have poor credibility across the board - be it social, economic or regulatory.
Kumar Nov 21, 2012
Online retail is 90% foreign money. What is government doing. On one side BJP says they wont allow FDI. And on another side it is happily nurturing online retails (akka FDI). flipkart (karnataka), Infibeam (Gujarat) - best example of BJP hypocracy. It either seems like BJP doesnt know what is online retail and where the money is from. Tomorrow I wont be surprised if i come to know that Amazon has a large stake in flipkart or infibeam.
Online retail is slowly killing the small traders. Again surprisingly small trader union etc is doing nothing.
IS EVERYTHING on SALE in INDIA?
Response to Kumar:
Manoj Dec 31, 2012
Kumar, some points :

1. In a laissez-faire market like India, online buying brings in a much higher level of transparency in pricing and product experience, at very low costs (surfing cost vs physical market exploration) hence it's a boon for value-conscious consumers. At the same time, it ensures producers get a larger share of the value of their products (indian supply chains have between 15-37 intermediaries depending on the category, as against 5-11 in China)

2. Unfortunately, poor telecom infrastructure has led to most poor consumers failing to benefit from these platforms. Internet penetration in India is 1/60th of that in China.

3. Online retailing requires far lesser investments than brick and mortar stores, which is a boon for capital short countries like India. And it will mean the large workforce engaged in trading today will have to divert itself to manufacturing, which will create much higher value for Indian economy, which is ridden with supply shortages in every area.

In my opinion, India should encourage 'quality' online retailing by providing publicly accessible internet and providing dispute resolution forums.

I too am against FDI at terms skewed heavily against India, but with our politicians being businessmen and lobbyists, rather than nation-builders, and with public being so passive, I don't realistically see this direction changing much.
Karthik Nov 16, 2012
While the article tries to understand the business model behind Flipkart, it unnecessarily delves into personal prejudices that are irrelevant to the story. I would request them not to quote numbers if they dont understand how to interpret them.

Good start but the article went downhill from there.
Kumar Oct 29, 2012
forget about who is good and who is bad. The real question is whether online retail good for india. we are labour intensive community. Are all these online sites ultimate agenda is to make small shop keepers their courier guys? personally i feel its a very bad trend. its a very bad for society. FDI and online retail are two things which are going to serverly affect the poor and middle class retail community. may be flipkart grow or tomorrow amazon will come and it will wipe off the retailers. What a shame for indian regulators.
Suresh Oct 17, 2012
Good luck Flipkart. I have used the site several times to buy books and other electronics. It has always been early on delivery. very satisfied.
Tina Oct 13, 2012
i hpe the site makes it good . i am a very satisfied customer of flipkart, and it has never let me down. every time the product was at my doorstep on time. and COD is a boon to us housewives who are not comfortable using credit cards on net, for which we would have had to depend on our husbands. women always have cash handy to get items which they would like to have but due to kids and responsibilities cannot leave the house for prolonged times.
god bless the bansals to give the indian housewives this luxury.
Prakash Sep 25, 2012
very informative and interesting. most of it is very true. Companies cannot sustain the kind of loss making and low margin. Flipkart is on a valuation game with IPO in mind.
Aks Sep 19, 2012
How can you compare Flipkart with Infibeam.com, Homeshop18.com, Snapdeal.com and Indiaplaza.com. It stands much above. Shop on any of these websites and on flipkart and you will know that you cant put them in same line.
Sushma Aug 21, 2012
Forbes India is owned by Network 18, of which Homeshop18 is a part of. How much of this review is true, and how much is exaggerated? Homeshop18 has now entered Flipkart's domain of books, while Flipkart has entered the mobiles and electronics domain. Can Forbes India put homeshop18 too under the same scanner as Flipkart?
Response to Sushma:
Manoj Dec 31, 2012
If there is any truth in this relationship being the cause of such an articles, I think Forbes India is digging it's own grave.

A basic practice in journalism about writing an uncomplimentary article is to get their comments, to balance the report. Does'nt appear to have been done. As I said in my comment, it's disappointing to see poor editorial standards from a well-known magazine abroad.
Response to Manoj:
Zulfikar Sep 11, 2013
guys - work at flipkart before passing comments on this article. It is a "lalla" company -
investors have no choice but to pump in more money till somebody decides to buy them out
Mohit Aug 2, 2012
Forbes India trying to take marketshare of mid-day!
Shree Jul 24, 2012
2 years of fervent devotion to Flipkart and I am slowly switching. Bought stuff for nearly a Lakh in these years, mostly books and phones. Why I am switching is because of the following:

1. Increased the minimum order for free delivery to Rs. 300

2. Had bee stupid enough o trust them blindly without checking the other online sellers as far as prices are concerned and I find out now that sometimes the difference is substantial.
eg. "Kafka on the Shore" by Murakami is sold by Flipkart at Rs. 261 when it is available in Landmarkonthenet @ Rs. 165.

3. Some of the items that I ordered recently took 15-20 days to deliver. That too with some things missing.

4. Curiously, some electrical stuff that I purchased kept becoming defective in a week and Flipkart kept replacing them. After the third time, I had to seek for the refund of the money and buy it from an brick and mortar store.

My reviews on that are here:

http://www.flipkart.com/philips-hl7610-juicer-mixer-grinder/p/itmd2ujmxda53khf?pid=MIXD2UJH9GVFN3WD

http://www.flipkart.com/bajaj-gx-12-3-jars-550-watts-juicer-mixer-grinder/p/itmdyczgeqk3vujc?pid=MIXDYCZDNBHY5E6H

Though I may be sounding pretty irrational, this feeling has started growing in me that probably the goods that they get are all some kind of second rate stuff.

I don't care who is behind them or who's managing, but as far as me and a couple of people whom I bought to Flipkart are concerned, it is all done now.

As far as price is concerned, I would choose buytheprice and greendust for electronics. For books, homeshop18 and and landmarkonthenet.
Krishnakiran Jul 23, 2012
FK is a lala company run by a bunch of jokers called Bansals. How can a company that make people work like slaves without any respect have so many fans. Hope these fans will come and work for fk and go away as haters. The worst part is that Fk is a Lala company run by lala people, they are just too insecure to share control and ownership. In that process, the better lot suffers.
Vidooshak Jul 23, 2012
Interesting contrast to this well-researched article is this goo-goo ga-ga article in VC Circle http://techcircle.vccircle.com/500/meet-the-people-who-run-flipkart-beyond-the-bansals/
Vcat Jul 18, 2012
Spot on from what I've heard about Flipkart. The number of people that stopped short of joining after being tipped off on the culture within.

The founders and their coterie are immature and comments like 'we'll fix him' for a former employee reek of an unrefined attitude.
Rohit Jul 17, 2012
undoubtedly the best and no hold barrels stuff on the much hyped e commerce...awesome writing by Rohin and fantastic guts to the forbes to back such controversial story...almost all stories abt so called leading companies are sugar coated without giving any real details (often companies pay for these articles as PR) unlike this forbes article...pls keep publishing these stuff...ppl who dont like this stuff r the ones who r afraid of skeletons in their own cup board n ar better staying away from this website...
Rohit Jul 16, 2012
Quite a let down Forbes! Expected you to put a better conflict of interest disclaimer. Didn't expect this from you guys. Even I believe Flipkart is unlikely to be successful but that is for different reasons.
Kushal Jul 15, 2012
The tone of the article suggested that instead of an unbiased research the journalists have just brought out the frustration and cribbings of some ex-employee. The fact that it mentions the hostel life in IITD and their culture, the ballsy attitude etc., is all mere unprofessional writings and purely a one-sided critcal view of the author of this article. Some of the points mentioned may be true but the way it is presented may seem to have some hidden ambitions of Forbes as it is someway (network 18) related to Flipkarts competitor Homeshop18 and therefore may be it is trying to defame Flipkart (deciphered from the tone of article); anyhow it doesn't help Homeshop18 due to its own pathetic service. Since the things you post may or may not be facts (questionable sources) and there is every chance of a normal reader beleiving it to be true (however it doesn't matter as they wont read this), i think a bit more responsible journalism would work and is good for everyone.
Rohit Jul 14, 2012
bottomline of the story was to show how the immature naive dictatorial attitude of the promoters of leading ecom company can kill the golden goose...company go bankrupt inspite of good intentions of the promoters but what do u say abt bansals who think fb is their 'keep'...big picture is wht kind of corporate standards did accel tiger fund bring into this company...wht were dey doing wen ppl were leaving the company....this company clearly demonstrates the expertise of accel n tiger in building businesses....shame on u guys
Anirudh Singh Jul 13, 2012
Let me give you a couple of examples of the level of amateurishness of the article.

1.The author mentions - Book distributors talk of Flipkart buying books from every single title in their catalogue. They were surprised, because many of those titles hadn’t sold in years - This is Ecommerce 101; There will always be an 80-20 split between what the merchant stocks and the consumer buys. Having said that, it is critical that the merchant has 100% brand depth because that is what will give the consumer the confidence to buy online. Category depth is one of the key drivers of ecommerce and without this, any ecommerce vendor will fall. Please do a little bit of research on Amazon, Zappos, Diapers etc. for further clarity on this. Which brings me to my next point.

2. The author mentions - It would take $2.8 billion in losses over six years before it declared its first quarterly profit in January 2002 - Please read why Amazon burnt the $2.8B and whether that was a loss making strategy in the long term. If it was, then certainly Amazon would't be worth $100B and offline retailers such as Sears wouldn't be worth $6B. To further let the author know, Amazon burnt $1B in bank debt. Now, had it been Forbes, you guys would have sensationalized this in true tabloid style. Going by your logic, even debt lenders which are far more conservative, were foolish to have lent to AMZN. However, to understand Amazon's strategy, which you use as a case study, please go beyond the first 3 links on your Google search for the same.

An amazingly badly researched article and shows a clear lack of understanding of ecommerce. Lost all respect and in my mind, you guys are no better than Filmfare gossip.
Response to Anirudh Singh:
Rohit Jul 14, 2012
without bothering merits in ur post, i assume u r one of dose guys who made investment note at accel or other vc funds for proposed investment in this company...ur tone is brazen.
Response to Rohit:
Anirudh Jul 16, 2012
No, I have never met Flipkart. My apologies if my tone offended anyone. The reason for the harsh tone is that I feel let down by the forced criticism of a wonderful company on points which are non issues and are tried and tested ecommerce strategies across the world.

I agree there would be many flaws with the company. However, I would have expected less flimsy arguments than the ones presented in the article. Also, I would have loved to see a disclaimer stating that Forbes India's parent company (Network 18 Group) has invested in Flipkart's rival (Homeshop 18).
Response to Anirudh:
Pk Jul 17, 2012
Anirudh, the author has mentioned that Network 18 parent of Forbes India, has invested in Homeshop 18 on the last page.
Response to Anirudh:
Lulz Jul 23, 2012
Seconded ! It is rather disappointing to see that the article repeatedly harps on the rather same point over and over again, which is the infighting and the power struggle which is apparently rife inside Flipkart. That argument notwithstanding, somewhere it is mentioned that the original stated goal was to "delight" customers; which seems to me like a very sensible objective in this segment. Which is more than I can say for many of their competitors out there.
Response to Pk:
Anirudh Jul 23, 2012
Thanks for pointing out. I did not see it in the online version.
Concerned Reader Jul 13, 2012
Sachin Bansal and Binny Bansal have audacity and Please, Forbes India use language that is decent because a lot of people read your articles.

Thanks.
Kapil11111111 Jul 13, 2012
There are still many fallacies in thr model which are not out in open. Tiger is a US based fund - and in India multi brand retail is NOT allowed. Can Bansals explain this?
Response to Kapil11111111:
Anandm Aug 8, 2013
e-commerce is excluded from that restriction.
Rocky Jul 13, 2012
This article seems malicious & biased with the way facts & issues are presented. A Similar graveyard of mis-deeds, misdemeanors, (either deliberate or otherwise) could be dug for facebook way back in 2007 when it was in formative years of its existence. A start up whether it be Apple, Microsoft, Amazon, Facebook or flipkart all have gone through their fair share of mistakes & errors during their initial years of operations when they were founded in a garage or hostel apartment. Flipkart may have its fair share of real problems right now either out of over-confidence, short-sightedness or gross negligence of the Bansals (founders), however the critique could not take away the truth that one single firm (be it Apple, Microsoft, Amazon, e-bay in their respective categories) have given birth to a new business segment: 兎-commerce in a country like India where internet penetration & e-retailing is a drop in the ocean. Similar clones like Infibeam, Homeshop 18 (sister concern of Forbes, T3, GQ, Vogue, CNBC Awaz, CNBC-TV18, CNN-IBN, In.com, Colors, History Channel), Myntra, Peperfry, Freecultur, Zabang, have sprung up in matter of a year or two following exact business model of Flipkart.

Amazon, (world痴 biggest online retailer) which has made a quiet entry in India through its comparison portal, made a loss of $8 billion before it turned profitable in 2002, 8 years after it was founded in 1994. Flipkart is still young, innovative & learning from its past mistakes, it may not even turn profitable for next 2-3 years, this being nature of the industry. Most offline retailers including Biyani痴 Big Bazar, Ambani痴 Reliance Fresh, Sahara痴 Q, Mahindra 壮 Mom & Me, are still waiting to break even despite being offline, retailer with large customer base.
Prasant Jul 13, 2012
mostly one sided views, i think this article was paid for by homeshop18
Shiva Nader Jul 13, 2012
The fact that things are murky in the top management was deduced by a few smart employees even in the lowest rungs of Flipkart. The top down murkiness has been unraveled, one must try to get the bottom up views of employees. How far is the management's attitude affecting the employee earning say 2.2L a year, remains a vital question. Never underestimate the man at the bottom. It is the cards at the bottom that matter in a pyramid of cards!!
Response to Shiva Nader:
Sunny Jul 13, 2012
Bottom, middle..all are royally screwed right now. People in the middle dunno what to do, 2 re- structuring and 1 re- engineering in a year, how does one expect people to focus on work when they are not sure where they will end up! As for the people at the bottom, an average spending of around 8% on increments doesnt make any difference to the poor guy who is making 15k per month..chai paani thats it (n all this when Fk has bloated up at a zillion% growth per annum). Of course Fk didnt have budgets, they had to kill letsbuy! Now everyone is questioning their personal growth, no one cares abt Fk grwth anymore
Sunny Jul 12, 2012
The hey days of flipkart is over. Their vision of being the largest e- com player in the country is gone out of the window. I see a future where flipkart will be just another company and other players with better management and equal/ better funding racing fk out. (PS: Amazon is waiting)

Work culture at Fk is rotting right now. Its extremely political and there is no trust in the system. Bansal'€™s clan rules the roast. The performers are forced to move out (Fk folks know it a little too well how to do that by creating circumstances) and those who are left behind are so insecure, they would not want to perform in fear of who takes offense and when (n how that is going to come back on them). The worst part is that Fk is a Lala company run by lala people, they are just too insecure to share control and ownership. In that process, the better lot suffers. I reckon Sachin Bansal's vision of opening a big bazaar online has come true. Sad reality is that this is as far as they could go. Creating an Amazon is in your dreams.

It is time for Sachin n Binny shed their insecurities, take a sneak out of their circle of trust dating back to IITD days and get their hands dirty. Sachin is too arrogant to take such feedback positively but yeah...your people are leaving, hope the customers don'€™t follow.
Response to Sunny:
Gopal S Golan Jul 12, 2012
Sunny and Nirman, both you guys seem to suffer from FK phobia. Why are you so paranoid?
Response to Sunny:
Shiv Nader Jul 13, 2012
It is not how many employees leave that matters, unless there is an EXODUS. It will take more than a few employees leaving, for the bosses at Fk to open their eyes to fact that the their EMPLOYEE DELIGHT is at a zero and the job market closes when Fk comes shopping! No referrals anymore at flipkart!! Ex-employee give negative recommendation of Fk. these and many other facts are not reaching the Fk Bosses - Bansals. Sachin, Binny WAKE UP and save your baby before Employees decide to kill it if the competition does not...
Nirman Jul 12, 2012
I have been shopping from flipkart for 6 months not because I like flipkart (it is a very bad/poor service) because I do not have those products available in my city.

Flipkart is based on FALSE ADVERTISEMENT where they do not deliver what the promise. They have a pathetic management which LIES TO THE CUSTOMER and I am not exaggerating. This is my personal experience and when I check some blogs about flipkart's review I found that I not alone.

There management is very poor (if not pathetic). They have extremely poor communication channel with the courier services and are always unaware of the reason for failure of delivery of the parcel.

For example, many of my shipments were returned back to flipkart by a particular courier service. Upon calling flipkart and asking them the reason as to why the items were not delivered they gave no reason and blamed the courier service. So I took the matter in my own hands and tracked down the branch/city of the courier service which received my parcel and when I asked them they told me THAT A FORM-50 IS REQUIRED AND FLIPKART NEVER PROVIDES ONE, so the parcel is sent back.

This reason was tracked down by me and I told flipkart to not to make the same mistake again but they are like super-lazy and un-attentive to customer satisfaction and they again made the same mistake and my parcel never reaches in one go and takes atleast 2 WEEKS to reach me everytime.

As I write this comment one of my parcel from FLOPKART is already 10 DAYS LATE. I never get angry in my emails or on the call with flopkart but these people simply ignore my patience and waste my time. I am sure with such attitude towards customer's online-experience, no matter what FLOPKART claims, they will go down very soon.
Response to Nirman:
Gopal S Golan Jul 12, 2012
There's something rotten in your comment. You have called Flipkart '"liars" and "cheats", based on your experience of shopping with them for the last 6 months. The reason given by you for your continuing to buy from them and face problems, is that "do not have those products available in my city". After your first bad experience with Flipkart, why didn't you try the other online retailers? Or are you a masochist?
Response to Gopal S Golan:
Nirman Jul 12, 2012
Are you a flipkart associate? May be. Anyways, coming to the point, they do lie. Yes they do, when you ask them for information they will bluntly provide you with false information adding to your agony. And that is cheating if you ask me because it causes you mental plus financial pain. I am a couple of products and 6 months old with flipkart. And about switching to other service. I will, eventually but not on being told by someone like you who calls people masochist. Seriously dude, I shared my experience and you keep your mouth closed unless you are a FLIPKART representative.
Arjun Rajkumar Jul 11, 2012
Hi Rohin, Enjoyed reading your writeup on FlipKart. Your article was well researched and it gave me a new perspective on FlipKart. I'm a loyal user, and I hope they overcome these issues that you highlighted and make it all the way.
Vikas Bahar Jul 11, 2012
I think this i one of the most less researched article of FORBES. It doesnt give an idea of what they want to convey

1) About Flipkart ( It is still the biggest e-commerce source in India, so doesn't is deserve some applause and detail)
2) E-Commerce (Just one liner doesn't give detail of the industry)
3) Failure of getting funds ( Is it such a big deal if a person fails once)
4) Problem ( Wasn't this the article was supposed to convey but only fails in that as well)

Even today FlipKart has the biggest and cheapest books distribution business.

If only the FORBES could take out some time to do some research and come with an article suiting the Title
Response to Vikas Bahar:
Nikhil Jul 11, 2012
Hi Vikas, I don't agree that Flipkart sells the cheapest books.

Kindly compare the prices with other online book sellers. And Flipkart delivers free only if the order is above Rs. 200/-.

Other online book sellers deliver it free even if the order is below Rs 100/-

I agree that Flipkart delivers it timely. But if the customer is not in a hurry then why will he/she buy the same item by paying a higher price???
Response to Nikhil:
Vikas Bahar Jul 11, 2012
Maybe there are some books which are cheaper but then there is no one who has the wide range like Flipkart.
Response to Vikas Bahar:
Shiv Nader Jul 13, 2012
Why Are you defending Fk? At best remain Neutral. Are you a part of the Fk ghost canvassing team? I know for a fact they deploy people to do things like this: pose as satisfied customers, post articles with backlinks and other such stuff....stay neutral please...
Amit Gupta Jul 11, 2012
So many players in the ecom landscape, everybody is trying to get the customer base through advertising and better deals. Lot of Innovative online retail companies such as bundlebaazi.com etc. also joined the band wagon.

http://www.retailopia.com/2012/07/bundlebazzi-new-concept-in-online.html
Mohan Kannegal Jul 11, 2012
This article is under-researched. It has viewpoint without any supporting info. So what if one VC did not invest. Cliques happen at startups, there are cliques everywhere in life, Peter Thiel recently said "if you want to invest look no further than a few miles from Standford Univ" how cliquey is that? Where is the evidence that too much customer service is hurting (every online retailer has sacrified profit for scale - amazon is the leading example). Steve Ballmer had said "I will kill him" when Eric Schmidt of Google was kicking Microsoft in Search. Eric Schmidt is still alive. What does that prove? That even in a business meeting or a press conference we say things when we are angry that we do not mean. So the "Usko dekh lengay" celebrity-journalism-style reporting is uncalled for. Anyone would be angry with an ex-employee who goes to the press. Which, by the way, does not imply ex-employees should not go to the press.

Flipkart may be doing well or doing badly. This article does not help us getting any insight into Flipkart at all.
Rohit Reddy Jul 10, 2012
its tight slap on the face of guys like Prashant, Anand at Accel who take false pride in their ivy leagues mba acads but are useless in managing their investments...whr d hell r corporate governance standards ? pity the LPs in their funds...now i wonder y top guys like neeraj n prateek left accel...LPs shld take this guys to task n ask their value addition to the investee companies other than writing cheques n taking home fat salaries...
Arjun V Jul 10, 2012
When I read the cover story although biased, it gave a perspective. I am a big fan of forbes. Heres my 2 cents ... I have used flipkart in the past and always preferred their delivery and their prices. At the same time, this was once upon a time. I get better deals through other online ecommerce platforms.

Heres something to ponder. I always believe theres no such thing as a -ve PR plug. I substantiate that by simply asking any one of you to check the most popular posts in forbes (be that read, commented, emailed, etc.) All of them seem to be the Flipkart story.

On the other end I read through the comments. I was surprised there were so many Flipkart loyalists. Not only do they swear by flipkart but also are ready to take on a war if required. :)

In my opinion this has been a great PR plug for the mutual benefit of Flipkart and Forbes.

Great Marketing link!
Hetal Gandhi Jul 10, 2012
While I know nothing about the work culture and internal dynamics of Flipkart, I agree that it is difficult to create profitable online business models in India given the price sensitive behaviour of Indians. I truly wish that Flipkart succeeds because as a customer, it is truly a delightful experience. The breadth of products and services are awesone
Jose Jul 9, 2012
'There are 2 things that this artiucle accomplished 1. To talk about an Industry that will open up faster in the next few years 2. The challenges of the management in taking the business forward. In an evolution of a company that too a start up, there is NO RIGHT or WRONG way to do business. it is trial by error. In FlipKarts case, they have done a brilliant job. Have been their customer for long and am so impressed with the entire process and price. They may be bleeding ! Am sure it cost them a lot of money to give the type of service but they are taking the position of 'Pioneer/Leader' in the Retail - Ecommerce in India, so they need to get it right if this means, bleeding for many years. How does it matter if the investors/shareholders are willing to wait it out. Amazon in the US started making money only from 2008. But their investors were willing to wait and invest during such a phase. In India with just 60 Million active internet users and 40M credit card users, Flipkart has a long way to go and they know it.

'The editor' & the journalist must have done more research by getting a copy of their statement of accounts / Balance sheet submitted to the ROC and have shown the revenues / losses / cash bleed / funding etc. With so much limited data, and too much of dependence on ex employees, it moved the article to 'Sensationalism'
Response to Jose:
Ujjwal Jul 10, 2012
very well said...
Praveen Jul 9, 2012
Flipkart Should take these criticism in positive. They are Doing wonderfully by adding new Items day by day
Shelley D Jul 9, 2012
While, the growth story of Flipkart is worthy to be applauded, the chasos that has crept behind the door is worrisome. In a country like India where e-commerce has yet to pick up, Flipkart will find it tough to break the barriers of contact beyond the metros and tier II cities. Therefore, it leaves a herculean taks for the founders and seniors to manage the business and volume going. Flooding the boardroom with IIT-ians with close links is not a great way to augment their busienss strategy. Need to think beyond IIT and IPOs
Response to Shelley D:
Shiv Nader Jul 13, 2012
True!! Also loyalist lobies and neglect of Merit is a negative attitude. This is strong in Fk... Bad for business becoz bad for employees and Employment market trust!!
Suvendu Tripathy Jul 9, 2012
The rate at which they have grown is commendable. If they have kept a close team or not communicated with the larger team or done something which is not good for company culture, then let us have a very good survey of the top 10 companies of this country and find out how they function? What is their culture? Why only blame flipkart? Most of the bigwigs of the Indian companies care very little about culture - which is very sad, but the media always makes heroes out of them every now and then and indirectly promotes the culture they have in their respective companies.
Karthik Jul 9, 2012
Just wait for another 6 months or 1 year you can see that Myntra.com will be merged to Flipkart.com to create a much bigger entity and avoid cash burn to fund the losses for the companies backed by same investors !!!!!
Response to Karthik:
Edward Jul 9, 2012
If Accel Partners can merge and liquidate Letsbuy with Flipkart, it will make sense if Accel Partners does the same thing to Myntra, Babyoye, Zansaar, Shersingh and Urban Touch. Indian Entrepreneurs are at the mercy of VC's who have majority ownership in start-ups. There should be an end to this unhygienic startup environment in India.
Response to Karthik:
Shiva Nader Jul 13, 2012
I said this already as early as March. Check out my article: Flipkart - The Acquisition flipside. On Wordpress.
Cerin Pathrose Jul 9, 2012
Worthy opinion
Deepak Madan Jul 8, 2012
guys you have been too rude and critical about FLIPKART ,give them some time,they should make their business model more effecient,they are young guys with no big experience it will take time........
Coolsap Jul 8, 2012
I have done some analysis comparing the prices of landmarkonthenet.com and flipkart.com and found that landmark is way much cheaper than flipkart... I dont really why flipkart is so much hyped

also a comparison of crosswords and flipkart would had been great... How is crosswords doing these days
Ashish Tripathi Jul 7, 2012
Why just flipkart, slew of so called e-commerce companies have been under trouble for the past one year. Illustrious venture like Moneyvidya.com have closed, librarywala.com is suffering while Myntra and SeventyMM have changed their business model. And the big daddy of all, make my trip, has lost 70% from its valuation since the listing date 2 years back. Flipkart has very tought competition from old players like Indiaplaza and Infibeam. New players like letusbuy.com have started created niches for themselves. While Flipkart may survive thinking of becoming an Amazon of India is literally an impossibility.
Response to Ashish Tripathi:
Amit Jul 8, 2012
Companies are paying great attention to improve their services. HS18 is a case in point:

http://www.ecommerceadda.com/2012/04/12/homeshop18-huge-improvement-in-delivery-services/
Hari Jul 7, 2012
Good to see an article which covers more than hype about flipkart.
Their moto of customer delight could be correct, but is it sustainable?
Shiv Shankar Jul 7, 2012
The article is so biased... Feeling some big background plays... It is too bad that the likes of Forbes is doing this... How can you publish these kinds of inside stories which are really disappointing... Is it promoted by Amazon as they have failed in all attempts to acquire flipkart and their Indian entry is very near..
All startups have similar hirings... the IIT recruitment and all felt really bad...
I have always enjoyed booking in flipkart and their delivery... All the best for them...
Brijraj Jul 7, 2012
Sounds like a very biased article.
Amit Gupta Jul 7, 2012
What exactly is motivation of this article ?

I don't see any wrong doing on the part of Flipkart. Forbes seem to be offended by the "audacity" of its founders. Its an Entrepreneurs job to take the company to unmatched success. Bansals are doing a great job so far.
Maverick Jul 7, 2012
Good work guys! Keep it up. Criticism should be about facts not the intent. Moment its on intent, questions about who is raising the criticism comes!?
Vijay Jul 7, 2012
to say the least, the intent of the article of this article is disappointing.
the analyses and arguments put forth in many cases are juvenile . In my eyes the credibility and integrity of Forbes is eroded .
Pankaj Dubey Jul 7, 2012
yeah their prices are slightly on higher side,may be due to high logistics cost , secondly there is a glut in the online shopping market and only fittest will survive in the long run.We will soon see what is happening up in the air on the ground too.
Manish Jul 7, 2012
Its surprising to see Forbes get into "India TV" type of Journalism. Anyone who has worked for start-ups and with entrepreneurs knows that even these brilliant people have their biases. There is no textbook for CEO's to function. Ego and prejudices are a part of every human being and therefore companies in their initial phase. It is when the company becomes to big that collective wisdom and emotional intelligence kicks in.

Flipkart may be valued at a billion but it is still a small company in many ways still. Most issues rather feebly argued in the article came from people fired and therefore having a personal vendetta with the company (we all know how disgruntled employees can be, no matter from which IIT/IIM they come from; they are still people).

This is average journalism at best by Forbes India.
Mahes Chimankar Jul 7, 2012
I don't expect such article from Forbes. I just want to say JUST TRY TO CREATE SUCH A BIG BUSINESS in eCommerce domain Where 100Cr revenue model per month.Then you will understand how difficult it is to manage all the things.

Flipkart is only Indian Brand in Online Space, give then time to show some great inning.

It May be possible at some point they will fail but now they are the leader of Indian eCommerce Industry. Dont try to take advantage of forbes background for promoting homeshop18 agenst FlipKart.



Rgards,
Mahesh Chimankar
http://www.Infozshop.com
Abhishek Jul 7, 2012
Flipkart has a rival in HomeShoppe18 (Network 18) and then when you see back to back two negative reports on FlipKart's performance, you start loosing faith in the brilliant magazine like Forbes India.
Neeraj Bhargava Jul 6, 2012
Thought this article massively under-appreciates what Flipkart has accomplished. They built an incredible brand, deliver almost flawlessly and are the benchmark everyone else aspires to meet or beat. Everyone hires trusted friends. The logistics part is a service to India, nobody does it better. Besides they can spin it off. These guys are young, give them the benefit of the doubt and chill. Be proud of them. They'll figure it out. And in case they don't and they end up becoming domineering and arrogant, haven't we seen that movie with a happy ending before, e.g. starring a certain Mr. Ellisson?

Personally speaking, if there's anything that bothers me about all this e-commerce stuff is that people are forgetting some basic business economics. As a wise CFO that I worked with once told me "Revenues are a delusion, profits are an illusion, cash is the only reality". Flipkart and others should remember that.

Good luck guys. Life is tough. Let's make sure we don't forget to appreciate when it is deserved.

Cheers,

Neeraj Bhargava
CEO - Zodius
Edward Jul 6, 2012
Looks like SAIF Partners has just started a full blown war with ACCEL Partners
Upkar Jul 6, 2012
This article makes for an interesting read but smacks of slander. Also the way it is structured looks like the story has been planted. Whether flipkart goes on to become the amazon of India or withers away, this brand of business journalism is dangerous.
Edward Jul 6, 2012
The Current domination by IIT's and IIM's running most of the VC's and their preference to fellow IIT's/IIM's leaves very less scope for the growth of Entrepreuners from Tier 2 Engineering Institutes and B schools.
Response to Edward:
Saurabh Jul 6, 2012
Very well said. A closed group of early movers controling variety of activities
Zoomster Jul 6, 2012
Great article! It's really amazing to see how people are ganging up against the author and Forbes, accusing them of yellow journalism. I guess its very typical of the modern Indian psyche where heroes are worshiped and its considered blasphemous to point out any flaws. Flipkart definitely is the current darling of the Indian startup scene. Some commenters may be right that IIT-D mafia angle is perhaps overplayed. Also, the quality of some of the recent hires at the top positions should be looked into. But that doesn't take away the fact that the article has highlighted very important concerns that could cause the giant's down fall. I think the title says it all. Only time will tell the real answer, but without a doubt, the question mark is present on Flipkart's ability to continue to rise and deliver.
Jainvicky Jul 6, 2012
This story was OK, just like another story of e-commerce business, which are published these days- how it was started, the founders, the investors, the logistics
Sudhakar Jul 6, 2012
It is a shame!!!... Never expected such a rubbish/un-professional article from Forbes... Let's consider this statement....
" Flipkart begins to look like an entity skating on thin ice. What lends credence to this view is that it is shared by General Atlantic Partners, the world'€™s 12th largest private equity firm with over $17 billion in investments"... Has there been any official statement regarding this ? The deal could fail due to multiple reasons....that doesn't mean the whole business model is flawed...

Flipkart's business model is nothing new. Its basic concept that they teach you in marketing 101. " Build the best mousetrap. The world will beat you to it!!".... most notable examples are: Google and facebook...
Manish Jain Jul 6, 2012
The cover story was a great read and got many people talking about the e-commerce space. I was really hoping the story would have focused more on the various costs the company is racking up to gain marketshare and talking about the overall market. The IIT Delhi mafia angle was interesting to read but that type of recruiting style happens at many companies that are started by alumni from elite universities such as Harvard and Stanford as well. When you spend a couple years with people in college you get to know them much better vs. scanning a resume and making a decision on the spot.

Ironic that the previous issue talked about how debt and rapid growth almost brought down the biggest traditional Indian retailer - The Future Group. Flipkart and The Future Group have something in common, when you bring on too much VC money (Flipkart) or debt (Future Group) you cede control of the company and it's mission. It appears that Kishore Biyani is taking steps to solve that problem and I hope that the Bansal's can do the same for Flipkart.
Rajesh M. Jul 6, 2012
I'm sure there are things Flipkart is not doing right and some that they've fouled up completely, but I really expected a better article from Forbes. This one sounds like a blog, and a poorly written one at that.

Also, I don't see why the writer is tweeting negative stories about flipkart from his personal twitter account. If you really stand by your story, these tweets are wholly unnecessary.
Kishore Jul 6, 2012
Scurrilous yellow journalism from Forbes! If Forbes not keeping an eye n their India operations?

Retail is a complex business. Issues such as category management, how much inventory to keep, wafer thin margins, cash flow problems are common to all retail businesses and not specific to Flipkart. And VCs refusing funding saying business plan is overoptimistic is common to many young startups and not specific to Flipkart.

While this article reveals some new perspectives about flipkart (aggressive management style, founders finding it hard to bring in and retain professional talent) it does so in a clumsy scurrilous manner unworthy of the Forbes brand.
Sachin Jul 6, 2012
Instead of just publishing one side story,Forbes should have provided views of Flipkart management as well.
Grow up guys providing one sided stories,and trying to become judgmental is not good journalism.
Edward Jul 6, 2012
In the long run a Decentralized Marketplace business model like Ebay will be more successful and profitable than Flipkart's Centralized supermarket business Model.
Response to Edward:
Arjun Jul 6, 2012
Edward i guess it depends on the operating model. In US ebay and amazon both are doing well but still customer is the king and he wants the item super cheap.

For a fact my last 17 transactions online, flipkart was the most pricey of all
Response to Arjun:
Saurabh Jul 6, 2012
Same here, I found their prices very high and could find better ones in Indiatimes shopping and Naaptol
Vikram Jul 6, 2012
Flipkart is a private business. They delivery customer satisfaction. If Forbes is accusing them of a "flawed business model", "closed management", "dissatisfaction amongst ex employees", and "arrogant CEOs' these are characteristics to be found in hundreds of other companies too. This article befits the same description Mahatma Gandhi gave to Catherine Mayo's book about India: "a drain inspector's report". Am a fan of Forbes. This is one occasion where I am not. Give Flipkart a break. You may be surprised. They may succeed. Plus they are not burning public money for Forbes to voice an opinion.
Response to Vikram:
Sk Jul 7, 2012
Sure, Forbes should limit itself to "voicing an opinion" on entities "burning public money" - like Air India, DRDOs, GOI, Mayawati, Lalu Yadav and the like. That should make Forbes' readership go stratospheric
Oddrider Jul 6, 2012
Interesting article...flipkart delivers well, but not sure how long the party will last. Maybe they need to start another ad campaign after this article, to wash off the negative publicity.
Sushant Jul 6, 2012
If you say CoD spoils the customers silly.. It means you have no idea about the Indian market and you are only thinking in terms of metro cities in India and not not in terms of Tier 2 or Tier 3 cities and rural areas. Majority of the population do not have Credit Cards and are wary of using debit cards online.

So CoD is an important option, a must have, for an e-commerce business in India.

While well written, you do not seem to very informed about the Indian market. I suggest you live in India or in a non-metro in India for 6 months.
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