To impose his directives on advancing the technology function, Sachin had made some changes. In late 2013, he asked Mekin Maheshwari, the company’s first engineering head, to take over human resources. For the past year, Mekin had been heading Flipkart’s digital content and payments businesses (which were shut down at separate times). Sachin believed that with Mekin’s background in engineering, the HR division, and the company as a whole, could be infused with a technological ethos. Sachin also gave Sameer Nigam a senior position in the engineering team.
Sameer had joined the company in 2011 when Flipkart had bought his startup Mime360. That business, which eventually morphed into the digital music platform Flyte, was shut down after it failed to grow in good time. But Sameer had developed a close relationship with the Flipkart CEO. An engineer with a business degree from The Wharton School, Sameer was a talented tech leader. Like Sachin, he, too, saw himself as an innovative technology entrepreneur. After Flyte was shut down, Sameer had been given charge of digital marketing. In that role, he sometimes clashed with Kalyan. Sameer was focused on attracting new users to Flipkart, while Kalyan wanted the digital marketing team to spend more on promoting sales events. Sachin had been impressed by Sameer’s belief that technology should drive marketing; he had also seen Sameer holding his own with Kalyan and other leaders. He decided that Sameer would add heft to the engineering team.
Finally, in July 2014, a week before Flipkart announced its billion-dollar capital infusion, Sachin found his window of opportunity.
Over the past few months, Sachin and Binny had spent a considerable amount of time in China. The internet boom that would make China the largest e-commerce market in the world, had taken their breath away. They observed that the business models of Chinese companies bore little resemblance to those of the more familiar American firms. These visits lefta deep impression on the Bansals; Sachin, in particular, was dazzled by the success of Alibaba and the emergence of Xiaomi, the startup that made smartphones, accessories and other electronic devices.
The Bansals had, in fact, been to China primarily to put the seal on a partnership with Xiaomi. Flipkart’s sales team had been courting Xiaomi executives, urging them to sign an exclusive partnership. The hugely successful Moto G phone launch had changed the way brands looked at Flipkart; smartphone-makers that had earlier rejected its exclusivity request were now eager to pursue such an arrangement. But for Flipkart, securing a deal with Xiaomi was paramount, as its executives believed that these Chinese phones would enthral Indian shoppers.
Along with Michael Adnani – Flipkart’s electronics chief – Sachin and Binny met the Xiaomi founder Lei Jun several times, in both Bangalore and Beijing. Over Chinese food, they talked about their businesses, exchanging insights and lessons that could inspire each other. It was, in all fairness, the Flipkart executives who did most of the listening. In his mid-forties, Lei Jun was already an accomplished entrepreneur. His previous venture, an online book retailer, had been bought by Amazon in 2004. His present startup, Xiaomi, was a spectacular success. Within five years of starting out, it would fetch a valuation of more than $40 billion, becoming one of the world’s most valuable startups. Its low-priced, powerful phones had become so popular that Xiaomi was outselling in China the world’s mightiest phone-makers, Apple and Samsung.2 Naturally, Flipkart was eager to bring Xiaomi’s phones to India.
In July 2014, Xiaomi agreed to grant Flipkart’s request – its phones would be available only on Flipkart. The first sale was planned for 22 July. Xiaomi had a distinct method of selling their phones: flash sales. It eschewed spending on advertising. Xiaomi believed that its phones were so good, their prices so compelling, that advertising was unnecessary. Like new members of a cult, users of Xiaomi phones raved about their devices, urging family, friends, colleagues and acquaintances to try them out. The company further stoked its cultish aura by rationing the availability of phones, creating artificial scarcity, which made consumers even more impatient for the products.
Knowing how sought-after its phones were, Xiaomi had bargained hard to extract the most favourable terms from Flipkart. Not only did the company obtain financial concessions, they also got the Bansals to promise that Flipkart would do all it could to ensure Xiaomi’s launch was a success. Sachin and Binny didn’t care if they had overcommitted; they were thrilled to have achieved exclusivity with Xiaomi. Flipkart hastily strengthened its tech infrastructure to handle the flash sale. Expectations from both camps were high as the sale opened in the last week of July.
The demand from customers blew all these expectations away. Flipkart’s website crashed, such was the flood of traffic.3 The sale was literally over in a flash; Flipkart had sold thousands of phones in a matter of minutes. Only a fraction of users who came to the site were able to buy the phones. Every Xiaomi sale for the next few months played out along similar lines. Only the sale duration reduced each time, phones selling out in seconds rather than minutes. For Flipkart, the Xiaomi business turned out to be even bigger than Motorola’s, which had so far been the largest contributor to its sales.
It was these two phone deals that kickstarted India’s e-commerce boom in earnest, considerably enhancing Flipkart’s popularity and that of online retail. Over the next few years, smartphones would become the predominant category for online retailers and, in turn, e-commerce would become the most important channel for smartphone brands. Apart from Motorola and Xiaomi, brands such as Apple, Samsung, OnePlus and several others, would generate a significant portion of
