As Flipkart’s books business expanded, local bookstores in Delhi would sometimes send email warnings to Ankit and Sujeet about Flipkart’s discounting practices. One retailer even sent a threat over email. This didn’t deter the company, which continued to cut prices. By 2011, Flipkart had also grown large enough to demand better credit terms from distributors. This helped them cut working capital, the cash needed to run the business.
Apart from strengthening its supplier relationships, in 2010, Flipkart focused on further improving its delivery speed. Working with courier companies had proved to be a constant struggle. Flipkart executives would try a variety of approaches to coax better service out of them. They would plead, charm, harangue, and as a last resort, refuse to do business with repeat offenders. After increasing its order volumes and consolidating them with one courier company, Flipkart would suddenly move on to others. At the Bombay office, for instance, Indranil Dutta would stop using a courier service for a few days if it refused to fix persistent issues. Starved of orders, executives at the courier company would come running to him in ‘full panic’ mode.
‘Sir, kya ho gaya? Do din se order nahin aa rahe hai.’ Sir, what happened? You haven’t sent us orders for two days now.
‘Haan sir, karte hai. Sir, aap aaiye, mere boss se milwana hai.’ Sure sir, it’ll be done. My boss would like to meet you.
Indranil and his colleagues in Bangalore and Delhi would keep repeating this exercise until they got their way.
While such dealings by themselves may not seem too significant, these hair-splitting negotiations with the couriers and suppliers, along with Flipkart’s technological improvements and enhancements in marketing and customer support, together constituted a gestalt. A process of continuous, relentless improvement was in motion at the company every day, propelling its business from one milestone to another. The ecosystem at the time was so resistant, the infrastructure so rudimentary, that e-commerce could have only been willed into existence through such painstaking persistence.
In the words of Vaibhav Pandey, a former Amazon executive who joined Flipkart in 2010 as one of its senior sales executives, ‘Flipkart was building the road and walking on it at the same time.’
SMALL IMPROVEMENTS ASIDE, Flipkart introduced in 2010 what would turn into the biggest expansive force for its business and for e-commerce: cash on delivery.
E-commerce transactions until that point were predominantly fulfilled using credit cards. This was for a variety of reasons, the chief among them being a fundamental mistrust between the websites and their shoppers. Websites were wary of being defrauded, while shoppers mistrusted websites that seemed incompetent when it came to fulfilling their basic obligation to deliver products they had already sold. Banks, too, were sceptical about e-commerce which meant that the technology for internet banking and debit card payments was underdeveloped. Credit cards had become the default payment option online, but less than ten million people owned one. India’s economy worked on cash.
Keenly aware of this fact, Sachin wondered, as he hankered for faster growth at his company, whether more people would buy products if they could pay in cash. Cash payments would mitigate the worry of receiving wrong or defective products; customers could simply refuse to pay. On an impulse, Sachin instructed the Flipkart operations team to launch a cash-on-delivery payment option. In preparation for this launch, Binny and Sujeet asked Flipkart’s courier service providers if they had the infrastructure to handle it. One of these courier partners, a company called Aramex, agreed to try it out. In April 2010, Flipkart introduced cash payments. A few weeks later, other courier providers began offering the service as well. The orders instantly jumped. But Flipkart wasn’t the first shopping site to think of cash payments. Indiaplaza and Rediff had introduced the option earlier. Flipkart would soon find out why cash payments had never picked up.
As Flipkart’s orders increased, all kinds of operational issues began assailing them: cash would be stuck with courier partners for weeks, products wouldn’t reach on time, customers would complain of the rude behaviour of delivery workers. The system was a mess. Every unpleasant incident would leave a stain on Flipkart’s image.
Flipkart executives were initially confounded by the problem. It was clear that they would have to offer cash payments. But there would be a backlash from customers if the courier companies kept messing up. Cash-flow issues also had to be considered. A few months into the launch of cash on delivery, the problems showed no signs of abating. The Flipkart brand had been painstakingly built. It was the only asset the company had, in essence. It had to be shielded. For days, Binny, Sujeet and other senior executives studied the issue, and soon the solution became obvious: Flipkart would have to launch its own logistics service.
It was going to be risky. A logistics service involved setting up complex processes to ensure that sales, warehousing, delivery and customer support divisions would seamlessly work together. Thousands of delivery workers would need to be hired and trained. Handling cash orders was fraught with hazards, too: fraud, theft, loss, delays. For months, Flipkart remained indecisive about entering logistics. The company’s executives had been studying the Chinese market closely. Tiger Global’s Lee Fixel had made investments in e-commerce companies in China and encouraged the Bansals to speak with Chinese entrepreneurs and senior executives. They soon learnt that even in China, transportation was a major problem for e-commerce companies which had taken to developing their own logistics services. In late 2010, Binny and Sujeet decided that Flipkart would also have to take the plunge.
They assigned the logistics launch to Vinoth Poovalingam. Twenty-four-year-old Vinoth had joined the company in April
