Predictably, the Amazon executives scoffed at the Bansals’ demand. Amit Agarwal said to them, ‘What is [it] that you’ve built? We can do all this in a month.’ But the Bansals stood firm, and the discussions had to end.
While Amazon did not buy Flipkart, it was clear that the American online retailer would enter India one way or another. Sachin and Binny used the occasion to send a clear signal to the company: Flipkart was ready for it.
After the talks with Amazon, Sachin returned to his offices in high spirits. He said to his men, ‘Maine unko bol diya: “You can’t afford my team.”’
A few months later, around June 2011, Tiger Global invested $20 million in Flipkart.5 This was the single-biggest round of funding secured by an e-commerce startup in India. Flipkart’s valuation soared to more than $200 million, making it by far one of the most valuable internet startups in the country.
After this fund raise, Flipkart made a startling statement of intent. The company set a target of generating $1 billion in gross sales within four years. It was a wildly ambitious goal. In the financial year 2010–11, it had pulled in sales worth ₹44 crore.6 While this was an impressive jump from sales of ₹11 crore in the previous year, it would take consistently stellar performance to get there. No one took the target seriously.
By now, Flipkart regularly featured in newspaper stories and news channels. It was held up as the most promising e-commerce company in the country. Some newer startups had even adopted ‘kart’ as part of their names, Healthkart and Lenskart being just two such instances. It was an echo of what had happened during the US dotcom boom of the nineties as Amazon, called Amazon.com at the time, saw scores of new online retailers add ‘.com’ to their names.7
The Bansals had become the faces of the new era of internet entrepreneurship in India. Sachin was invited to speak at several events and panels on entrepreneurship. One such panel was attended by Pranay Gupta, whom Sachin knew from IIT Delhi. In an attempt to avoid awkward conversation about their IIT years, Pranay fibbed that Sachin had always been ‘super-smart’, an outstanding student at IIT, the implication being that Sachin was destined to become a successful entrepreneur. But he was surprised when Sachin responded, ‘Nahi, yaar. I must confess – if you had asked anyone in my batch if I would be an entrepreneur, no one would have said that. I was normal, nothing special.’ At IIT, Sachin had indeed been a regular guy, another face in the crowd.
Pranay did notice that Sachin was now a changed man. ‘There was a distinct difference ... He had a presence about him ... a certain confidence.’
FLIPKART HAD STARTED off by sourcing products from distributors and brand companies as and when it received orders. But in late 2010, in its push to cut delivery times, the company had started stocking books, phones and other products before customers even ordered them. Flipkart also started developing mechanisms to predict demand. In most product categories, a majority of sales came from a small selection of the products. So, Flipkart began buying many of these products in advance. This was, in fact, illegal. Indian law prohibited e-commerce companies that had raised foreign capital from stocking goods, allowing instead a marketplace model whereby an e-commerce platform could connect shoppers with third-party sellers. There was no reasonable rationale behind the law. It was in place mostly because the government exercised tight control over the retail business. Powerful lobby groups with political influence had ensured that foreign retailers were barred from operating directly in India on the grounds of protecting domestic trade. The checks on e-commerce stemmed from these regulations.
Nevertheless, Flipkart had realized that in order to maintain its high service standards, it would have to hold inventory. There was no ecosystem of sellers capable of delivering the excellence in service that Flipkart wanted to give its customers. The company began to consult with law firms about ways to circumvent the law. A new plan was drawn up. On paper, Flipkart would present itself simply as a marketplace that operated the website Flipkart.com. An entity called WS Retail Services was created that would act as an external seller to the company.8 WS Retail was a nod to the name ‘WSpot’ they had once considered as an alternative to Flipkart. In practice, however, the entity was controlled by Flipkart.9 Sachin and Binny, along with a relative of Sachin, were the owners and directors of WS Retail.10 Through this questionable structure, versions of which were later adopted by other e-commerce firms, Flipkart managed to skirt India’s rigid investment laws.
AS ORDERS INCREASED through 2010, the company’s tiny offices in Bangalore, Delhi and Bombay that had doubled up as warehouses, ran out of space. The growth in sales had convinced Flipkart executives that the company would need far bigger warehouses. By the end of the year, the company opened two huge warehouses in Bangalore and Bombay. A few months later, in 2011, it rented an even larger one in Delhi.
Flipkart had now turned into a proper operations company, doing real-world things, getting its hands dirty. It was no longer just engineers running a website, tapping away at their keyboards, writing clever software. Technology was an essential aspect of Flipkart’s business, but its scope and application were limited. At the centre of the company was the operations machine. (This was, however, not how Sachin saw it.)
There were essentially two Flipkarts. One was the Flipkart of the Bansals, located in Bangalore. This was the brain of the company, the direction-setter, the part that kept customers happy through smart use of
