12 Years of Indian E-commerce
It was 2006. Yahoo! was the leading Internet giant with a valuation north of $40 Billion, though Google, which had then IPOed two years back (2004) at a valuation of $23 Billion, was fast catching up. There was no iPhone or Android. Nokia was still the largest selling mobile phone company and a 256Kbps internet connection was considered fast.
I was working as an Intern in Bangalore and had just gotten a Debit Card and Internet Banking enabled. Till then I used to visit a bank in person, fill up a paper form and withdraw money manually. Those were early days for the Indian Tech Startup Ecosystem and E-commerce had not taken off yet. However, there were a few portals (thats what we used to call them back then) such as sify, indiatimes and rediff where you could buy stuffs online. I had my first experience with online shopping that year.
I was looking to get a gift for a friend. I ordered a cute little Bonsai Plant on Sify Shopping and paid for it online. If my memory serves right, there was no concept of Cash on Delivery then. Unfortunately the plant never arrived and it took me another two months to get the refund. I didn’t let this one experience deter me. Over the next few years, I tried out online shopping at multiple sites. Most of the times the orders didn’t turn up and if they did, they were very different from what I had imagined. While Ecommerce provided access to a wider range of products, shopping online in 2006 was in many ways an inferior experience to offline shopping. Deliveries took forever, customer support was non existent and prices were not competitive. But things were about to change.
Sachin and Binny Bansal quit Amazon India to start Flipkart in 2007. I vaguely recall reading somewhere that the original idea was to build a price comparision website before they pivoted into an ecommerce platform selling books online. Around the same time, Vishal Mehta quit Amazon US to start Infibeam and Mukesh Bansal came back to India to start Myntra. Looking back, 2007 was the dawn of a new era but at that point in time it didn’t seem so.
While things look much different now, in the early days Infibeam had more momentum going for it. Starting as a platform to sell cars, it had expanded into other verticals. In 2009, at the first ever UnPluggd event Infibeam unveiled the Pi Reader, the Kindle clone for India. At the same event, Sachin Bansal gave a talk about their journey with Flipkart. They were still selling books only, in plain old paper format. However, they had organically grown to an Order a minute run rate and were about to pull ahead. What distinguished Flipkart from the incumbents was a sharp focus on customer experience and reliability.
Flipkart raised $1 Million from Accel in 2009. That marked the start of the e-commerce frenzy. Letsbuy.com was started with focus on electronics. Bigshoebazaar, that later became Yebhi.com, took inspiration from Zappos and started an online shop for shoes. Myntra pivoted to a fashion and lifestyle e-commerce platform in 2011 and Snapdeal, which had started as a Groupon equivalent for India pivoted to a full fledged e-commerce store in early 2012. Rocket Internet launched Jabong and Amazon entered India with Junglee.com. Flush with VC funding, all major e-commerce players started advertising aggressively on print and media. 2012 was a pivotal year as India finally started shopping online. I distinctly remember visiting my home town then, a Tier II town in Odisha and found my relatives ordering baby shoes and sarees online. The world had turned around and we had people coming back to join the India’s growth story.
After testing the waters with Junglee for a year, Amazon launched its marketplace amazon.in in India in June, 2013. This marked the beginning of a land grab for the Indian e-commerce market between Flipkart and Amazon. Flipkart had already started preparing for this war and had acquired Letsbuy.com in 2012 to boost its electronics and mobile phone category. In 2014, they acquired Myntra. The same year Jeff Bezos flew down to India and announced a $2 Billion investment in Amazon India operations.
That Diwali, Flipkart launched the The Big Billion Day Sale. Other players such as Snapdeal and Amazon also started running media campaigns to counter it and launched their own versions. India had not seen anything like this before.
The sale started at 8 AM on October 6. What followed was frenzy of online purchases by Indian consumers. Items went out of stock in a jiffy. Over $100 Million of sales happened in 10 hours. It did leave a lot of customers unhappy as systems failed, orders got cancelled and payments didn’t get through. Flipkart did try to make it right for their customers. After the sale was over, Flipkart reached out to me and placed the order for me for the same item I had tried to purchase but couldn’t due to technical issues.
The next four years saw other players fight for relevance in a world increasingly dominated by Flipkart and Amazon, who in turn competed bitterly for becoming the leading online shopping destination of India.
Amazon had launched in China in 2004 by acquiring Joyo, a local leading online book seller. However, a decade later it was still struggling and was significantly left behind by Alibaba and JD.com in market share. India presented an opportunity to Amazon to redeem itself. Launched only 2 years back, India was already the fastest growing international market for Amazon. Amazon had scaled its catalogue to over 25 Million SKUs and was catching up fast to Flipkart.
At the end of FY2015, Flipkart was on a Annual GMV Runrate of $3.8 Billion and Amazon was on $1 Billion. However, a bold experiment by Flipkart of going app only with Myntra backfired (or did it) and saw Amazon catch up with Flipkart on GMV the next year. Amazon launched its Prime Subscription Service in mid of 2016, minus the Prime Video Subscription which came in towards the end of 2016. It was priced at Rs 499/- per year and while it had launched in limited cities first, Amazon scaled it to 100 cities very soon. Flipkart’s own attempts at a Subscription Service called Flipkart First, launched a year earlier had not garnered much traction primarily due to the limited collection of items where it was applicable. Having said that, I recall wondering shelling out Rs 500/- for Flipkart First when by default the deliveries, at least in Tier 1 Cities, were already fast and reliable. I did sign up for Prime in 2017 for Prime Music and Video.
Flipkart did have an ace up its sleeve in Myntra. It was now the leading online destination for fashion and accessories and its sales had grown to over $0.5 Billion. And in 2016, it acquired Rocket Internet’s Jabong and payment startup PhonePe. Jabong’s acquisition helped Flipkart further strengthen its position in the Fashion and Accessories vertical and PhonePe is now one the leading mobile wallets in India, riding on the wave of UPI.
2017 was a decisive year for Flipkart. Where 2016 saw Flipkart falter and struggle against Amazon, 2017 was a year of resurgence for Flipkart. It did however start with a management change with founder Binny Bansal making way for Kalyan Krishnamurthy as the CEO of Flipkart. There was also a merger deal with Snapdeal pushed aggressively by Softbank that failed. However, Flipkart did go on to raise $2.5 Billion from Softbank Vision Fund and $1.5 Billion from other investors in mid 2017. That year’s Big Billion Day, Flipkart upped its game and sold goods worth $1.5 Billion, almost half a billion dollars more than that of Amazon.
In May of 2018, Walmart acquired a majority stake in Flipkart for $16 Billion . It marked the biggest startup exit in India and an important milestone in the ecosystem. It created wealth not only for the founders but also the employees. At the same time, it gave Flipkart the necessary backing to compete with Amazon.
We are at an interesting juncture. My mom, who is over 60 now, gets online on her Samsung Mobile Phone and spends hours browsing kitchenware, clothing and accessories on a plethora of ecommerce websites that I didn’t even know existed. It is remarkable how far we have come from the days when mobile phones were bought in local electronics shops and sarees from a traveling sales person who visited your house once every few months. And you can’t help but wonder what will the next decade bring.
