Having its own logistics service allowed Flipkart to exercise complete control over order deliveries. It could now gain exact knowledge about the movement of each order. When customers called to inquire about their orders, Flipkart was ready with answers. Earlier, customers would feel vexed when Flipkart would fail to explain why their orders had got delayed. ‘That was the biggest problem before, when we had no control over the delivery process,’ explains Vinoth. ‘If there was a sudden spike in volume, the delivery speed would suffer and we were helpless. We were at the mercy of couriers.’
Within a few months of its launch, the logistics service was capable of handling more than one hundred deliveries each day. It was then expanded to serve other areas within Bangalore. The most telling result was a big hike in customer satisfaction scores. Customers started receiving their books in one or two days, sometimes within hours after the purchase. They were thrilled. The in-house service had been initiated as a hopeful project but it was clear that running a logistics fleet could bring huge benefits. The company began to think about how to implement it in other cities.
To expand the logistics service, Flipkart would first need technological systems. It would be impossible for people using Excel sheets to track the movement of thousands of orders – the use of technology was essential. Six months after the service was introduced, the tech systems were ready. In 2011, the company decided to expand the service to Delhi. It also decided that a supervisor was needed to oversee the entire logistics operation. Vinoth had got the service off to a promising start. But there was one problem: he wasn’t fluent in Hindi. Sujeet and a few others believed this would be a handicap, especially in the high-demand cities of Bombay and Delhi where Hindi was the lingua franca of blue-collar workers. By this time, Sujeet had convinced Anuj Chowdhary to return to Flipkart. Anuj’s startup wasn’t going anywhere and he didn’t mind coming back to the familiar environs of a company which had grown considerably in the short time he had been away.
THE INTRODUCTION OF cash on delivery and the subsequent creation of the logistics service was another instance of how Sachin and Binny complemented each other. Sachin had pushed Flipkart to launch cash payments, but to make it a success, Flipkart had to enter a new, complex area of logistics, where Binny excelled.
By the end of 2010, Flipkart was flying. The addition of new categories, the expansion in books, the website improvements, combined with the introduction of cash payments and other advances, had kept pushing up sales. At the end of the year, monthly gross sales had increased to more than ₹10 crore from less than ₹1 crore at the start of the year. It was like seeing a skyscraper being built in record time.
What was equally remarkable was that Flipkart had become a cult brand without spending on advertising. In 2011, as it strived to become a bigger retailer, the company would invest large amounts of cash on marketing, but its initial success was almost entirely based on the customers’ word of mouth. Flipkart users would rave about its service, encouraging others to sign up. Those who did weren’t disappointed, and they, in turn, enlisted their friends. This meant a rapid rise in orders, which helped the company win the trust of its suppliers and courier partners. Flipkart was benefiting from what is known as ‘the network effect’.4 The primary force behind this self-fulfilling vortex was Flipkart’s relentlessness in pleasing customers – just like it was at Amazon.
With Flipkart’s rise, Sachin and Binny were quickly gaining fame in the startup world. Their ascendance startled their IIT friends and acquaintances. Some of their former flatmates at the NGV apartment complex, and former IIT acquaintances who had declined the Bansals’ offer to work with them, were jealous, filled with regret. Others who knew them were simply confounded.
One such acquaintance was Anil Kumar, Binny’s batchmate from IIT Delhi. When Anil had met Binny in 2008, he had laughed off Binny’s efforts to raise capital, thinking that Binny had lost touch with reality. More than two years later, Anil’s startup RedSeer was doing well. It worked on contract with larger consulting firms such as Bain, earning fat commissions. When he started RedSeer, Anil had no doubts that he had a better chance of success than Binny. Now the truth was out, irrefutable. For Anil, and many others like him, their IIT Delhi pedigree was a badge of honour. It instantly made one more respectable. Many graduates of the institute are known to proudly reveal their alma mater at every opportunity. When Anil introduced himself as an IIT Delhi graduate in Bangalore’s tech circles, he would draw what became a familiar response.
‘You’re from IIT Delhi, are you?’
‘Yes, batch of 2005.’
‘Achha, toh Binny ke batch se ho?’ Oh, so you would be from Binny’s batch?
Anil did double takes the first few times he heard this. He couldn’t believe that his identity had become linked to Binny’s. It became clear to him that his nondescript,
