The technology team implemented this instruction literally, making immediate changes on the app to provide prominent positioning to low-priced, high-volume products. On the app’s opening screen, products such as cheap footwear and slippers were promoted. These goods, offered by inexperienced third-party sellers, sold in high volumes initially, but their quality was poor, leading to higher rates of product returns. Still, sales leaders fell over themselves to stock up on cheaper items. Instead of jeans and shirts, socks, underwear and belts were hawked to customers. These abrupt changes confused and disoriented customers. As with any other retailer, Flipkart offered a mix of low-value, mid-value and high-value products. A customer might have wanted to purchase from all three sections. According to a Flipkart sales executive, the product team needed to understand the importance of striking a balance. This balance could only have been attained by a thoughtful approach, which proved to be elusive because of the broken relationship between the tech and sales divisions.
The company’s top leaders had a weak grip over day-to-day matters. Sachin was busy with the advertising business, Binny had restricted his involvement to Ekart. As the head of the marketplace and commerce business, it was eventually up to Mukesh and his seniormost executive, Ankit Nagori, to ensure that the sales function ran smoothly. But Mukesh would rarely be seen at sales meetings and displayed little interest in discerning how Flipkart’s business actually functioned on the ground. Mukesh believed that, as the leader of the commerce platform, he wasn’t required to immerse himself in implementing decisions; that was his team’s responsibility, and he had accordingly given free rein to executives such as Punit. Meanwhile, Ankit stayed absorbed in expanding the marketplace business – in its bid to move away from the inventory model, the company was adding tens of thousands of third-party sellers on its platform.
In 2015, few people at Flipkart seemed to bother with the seemingly mundane matter of running the company. Engineers were busy launching new innovative features on the app to fulfil Sachin’s wish of revamping Flipkart into a technology company. It was often a self-indulgent pursuit. Two new features were launched in quick succession to much fanfare: Ping, a messaging service, and Image Search, which let customers search for products based on pictures. Flipkart’s leaders believed that the continuous introduction of such features would lead to a superior shopping experience on the company’s app, better than walking into a mall or a high-end store, certainly better than shopping on the jaded old desktop site. Such ‘moonshots’7 were prioritized even though Flipkart was yet to fix fundamental flaws on its app. Its basic search feature was far worse than that of Amazon. This was symptomatic of the heady environment at the company – it was ‘solving First-World problems when it had Third-World issues,’ many of which hadn’t been addressed. In its early years, Flipkart had been characterized by a ‘let’s do it’ spirit. Now, success was considered inevitable – it was Flipkart’s entitlement. The management said, ‘Think big – for the long term.’ ‘And everyone started thinking big,’ says a mid-level sales executive. ‘Everyone was building for the future. No one was focusing on the present. It was assumed that the moonshots we were pursuing will automatically translate into growth. But how would sales actually increase – no one was going into [these] details. Bas hawey mein baat ho rahi thi – everyone was building castles in the sky.’
The marketplace business wasn’t faring too well either. Sachin had been insistent that the company immediately shiftto the marketplace model. Accordingly, Flipkart tried to move sales of most products – smartphones, its biggest category, was the exception – to third-party sellers. On Sachin’s orders, the marketplace team led by Ankit dedicated most of their time towards bringing thousands of new sellers on to Flipkart. Sure enough, every month, the seller count kept going up. Periodically, Flipkart released press statements, celebrating its ever-increasing seller numbers, as if it was breaking records. But no one, apart from Flipkart, was interested, no one was keeping score. Certainly not Flipkart’s customers. The headlong shiftto the marketplace model, in fact, caused considerable damage to Flipkart’s brand. Inexperienced sellers failed to deliver the high standard of service customers expected from Flipkart. Some sellers would ship black T-shirts when customers had ordered grey, or red shirts instead of maroon. Some of them shipped inferior or second-hand goods; many lacked the rigour to meet delivery timelines; fraudulent activities weren’t uncommon. Flipkart had been built to be a retailer; its technology tools, processes and logistics systems were designed to serve a retail business. It didn’t have the means to run an efficient online marketplace, which is an altogether different business. The company could only have built it over time, but it wasn’t ready to wait.
In one especially egregious case, third-party sellers defrauded Flipkart of several crores of rupees. The company had set up a fund to indemnify sellers for ‘bad behaviour’ by customers. As per Flipkart’s policy, if customers returned products despite the sellers not being at fault, they would be compensated by the company. Exploiting this policy, some sellers set up an army in a small city that would place orders only to cancel them. It was a few months before Flipkart caught on to this fraudulent business. It wasn’t just Flipkart that had to deal with such problems; all online marketplaces, including Amazon and Snapdeal, struggled with a variety of seller and customer frauds that year. It is a common feature in a nascent market that has suddenly exploded; e-commerce firms eventually catch on and are known to then devise mechanisms to weed out such activities.
In the advertising business, too, Sachin effected radical changes. After taking over the fledgling business in early 2015, one of Sachin’s first acts was to shut
