Can two players beat big company?

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Sachin and Binny Bansal both had coding jobs with Amazon - but quit after just 18 months. Why? Because they thought they could beat Amazon at its own game. 

The result? Today, they just raised $1.4 billion for their startup, Flipkart, which 10 years after it launched is now worth $11.6 billion.

Here’s three big flips that led to Flipkart’s success

FLIP ONE: Focus on the customer, not the competition.

Sachin recounts the story, “When we were working with Amazon we got bored… So we basically asked the question ‘can two people working from home compete with the bigger players?”

“We went and did our research and we found that the answer was yes.” How? By realizing that the technology players were not doing such a good job at service. And “If we could do a good job there, we could probably compete with them.”

Easy, right? No. They started in 2007 from a Bangalore apartment with just 400,000 rupees (US$5,900). Amazon began by selling books online. How hard could it be to do the same in India? Very, as no one was buying online at that time: “We used to stand outside Gangaram Book Stores on Church Street and hand over Flipkart bookmarks to the people coming out of the shop.”

The two persevered, knowing if people just tried their online store, “our business opportunity was to do better than everyone else in terms of service.”

FLIP TWO: If you can’t fix the problem, throw it out.

The biggest problem the two faced was the same one that all the other e-commerce companies were facing at the time in India: “How can anybody trust a new company with their money?” 

Sachin remembers, "We tried to give them a better interface, we tried to build a brand, that kind of thing". But none of that made much difference.

The breakthrough came when they thought "If people won’t trust paying online, why keep trying to make them?" 

That’s when they created their ‘Cash on delivery’ model, and sales took off. The entire Indian e-commerce industry then grew with the aid of the cash on delivery model that Flipkart pioneered. Then as trust grew, buyers got more comfortable paying online, and Flipkart launched their own payment gateway, PayZippy.

By sidestepping the problem instead of solving it, Flipkart began to grow: “In 2007 we were two people. By 2008 we were five people. By 2009 we were over a hundred.” Today Flipkart has over 30,000 employees and $2.2 billion revenue.

FLIP THREE: Beat Amazon by not being Amazon.

Flipkart began expanding into many sectors outside of books, just like Amazon, but Sachin saw what made the India market different from the US market. First, mobile first. Sachin focused on their mobile app and initially made Flipkart mobile-only, saying: “Consumers are showing us the way. If we don’t focus on mobile as the primary channel, somebody else will.” 

Then, to beat Amazon they followed Alibaba’s minimal stock model, connecting sellers directly with buyers instead of getting caught up with all the stock challenges that Amazon had. Sachin now compares Flipkart more to Alibaba than Amazon, saying “Yahoo had invested the same amount in Alibaba in 2005. It was the inflexion point in China then, exactly where India is today.”

What could you do to flip your own thinking?

“Every side of a coin has another side.” ~ Myron Scholes

Every coin has 3 sides: A side, a flip side, and an edge.

To see both sides, live on the edge.

Today, Sachin and Binny’s gamble has paid off, as it announces a new $1.4 billion funding round from eBay, Microsoft and Tencent, valuing Flipkart at $11.6 billion. While this is lower than its last funding round, it's coming from global heavyweight partners and signals the beginning of India's next chapter in growth.

Talks are now underway for a merger between Flipkart and their rival startup, Snapdeal, and with this new funding Flipkart now takes over management of Ebay India. This comes just weeks after Alibaba invested $420m in another Indian e-commerce startup, Paytm. These big deals back up Sachin’s prediction that India’s tech growth is just five to eight years behind China’s.

So keep watching this space!