Flipkart had reached out to him because the Bansals were keen to prepare a long-term strategy to keep Amazon at bay. While Amazon’s launch had been a meek affair, they knew that the American company would soon turn into a serious rival. Amazon was struggling in China, which meant India was the last big retail market that remained unconquered. It was obvious that Amazon would throw its might behind succeeding here. Its country manager in India, Amit Agarwal, was a highly regarded leader. Amit had also led Amazon India when the Bansals worked there as junior engineers. His appointment was proof that Amazon wanted to avoid the mistakes that had crippled its China venture, where its management team had felt unfamiliar, unable to grasp the nuances of its retail market. (Amit was the same Amazon leader who had laughed off Sachin’s asking price of $1 billion for Flipkart in 2011.) Michael, on the other hand, had worked at companies that had been through the trying experience of an Amazon onslaught. The Bansals believed that his experience would be useful in the coming years.
It wasn’t just Amazon; Flipkart had another rival to consider: Snapdeal. The company’s shiftto e-commerce was going well. Its CEO Kunal Bahl had made a bold announcement that Snapdeal would register gross sales of ₹2,000 crore in the financial year 2013–14. Taking a dig at Flipkart, he said that its inventory model was ‘dead’, and touted the superiority of Snapdeal’s bazaar.3 Actually, despite its fast growth, Snapdeal was a distant second to Flipkart. But Kunal was an articulate, persuasive young man, a consummate salesman. In early 2013, he persuaded eBay – the inspiration for Snapdeal’s new avatar – to invest in the company.4 The investment, which was announced just a day before Amazon’s entry into India, included a commercial partnership between Snapdeal and eBay.5 Snapdeal had snagged a highly credible name in the e-commerce world. It was unsettling for the Bansals to see a local rival being strengthened thus, even as a renowned international giant was entering the fray.
After many months of talks, Michael joined Flipkart in late 2013 as the head of its electronics business. Sales of electronics products were increasing rapidly, but the heavier spending on discounts was also pushing up losses. Michael pointed out to his colleagues that their method wouldn’t endure. He explained that one could cut prices to boost sales, but ultimately, the P&L would suggest that it had all been in vain. This would be self-destructive, the surest way of losing to Amazon, which was brutally competitive. He warned, ‘There will be no Flipkart in 2015.’
Along with his teammates, Amitesh Jha and Sandeep Karwa, Michael devised a new plan: exclusivity. They would convince certain phone brands to sell their products only on Flipkart. It was a wildly ambitious idea. While e-commerce was expanding, an overwhelming majority of Indians still did all of their shopping in physical stores. And even though brands had grown more accepting of e-commerce, they hadn’t embraced it. They used online retailers primarily to clear out stocks of old phones. Some brands had reluctantly agreed to allow pre-orders on Flipkart – it was free of risk. But restricting the sale of their latest products to a shopping website was inconceivable to them. Even Flipkart executives were incredulous. When Michael presented the exclusivity idea, Sachin responded, ‘Are you kidding me?’
Michael met with the leaders of some of the biggest phone-makers – Samsung, Apple and Micromax. As Sachin had warned, Michael’s idea met with laughter and ridicule. One executive scoffed, ‘Flipkart is just another website. You sell a few thousand phones. We don’t even think this e-commerce is going to last.’
But Michael persisted, with a tweak to his plan: he would find brands that needed Flipkart as much as it needed them. One of the phone companies that Flipkart had been in talks with even before Michael came on board was Motorola. Once the world’s leading mobile phone brand, Motorola had lost its way. It was now trying to recapture its glory days. Sandeep Karwa, the team leader for Flipkart’s mobiles business, had been tipped off by a collegemate about Motorola’s India plans. Flipkart also reached out to Xiaomi, a Chinese startup that was winning praise for its cheap, high-quality smartphones. But Xiaomi was undecided about entering India. Motorola, on the other hand, had been working on its India launch for months. Flipkart’s talks with Motorola had gone well. In January 2014, Michael, Amitesh and Sandeep flew to Delhi to meet their team one last time. Before leaving, Michael – whose desk was next to the Flipkart founders’ – mentioned to Sachin where he was going, only to be dismissively laughed off.
All the key leaders of Motorola were present at the meeting. They said they were willing to work with Flipkart, but not exclusively. Moto G, the phone with which it would launch in India, had been well received in other markets. The obvious strategy in India would be to sell it in stores nationwide, and Motorola was inclined to do just that. But the Flipkart executives deployed a mix of flattery, persuasion and admonition to convince the company to discard that plan. They warned the Motorola team that the phone was overpriced, that the overheads of sales demos, advertising, and so on, would add up. Very soon, Micromax and Samsung would undercut Motorola, weakening them yet again. They’d exited the market once before and were now just repeating old mistakes.
Instead, Michael and his colleagues implored Motorola to sell only through Flipkart, which would bear all logistics and marketing costs. Motorola could take the opportunity to lower the phone’s price and make it more enticing for customers. To be able to cut prices without losing margins was tempting for the company. What clinched the deal was Flipkart assuming obligation of selling 125,000 Moto G phones in six months. By now, Kalyan, the newly appointed sales head, had also grown confident about the proposed deal. He backed his team’s efforts to woo
