Home > Internet > Flipkart To Head Towards Profitable Revenue Growth, Not Just Revenue Growth: Co-founder Sachin Bansal

Flipkart To Head Towards Profitable Revenue Growth, Not Just Revenue Growth: Co-founder Sachin Bansal

Flipkart Online Services Pvt Ltd, which runs the e-commerce site Flipkart.com, has had a busy year (to say the least) in 2011-12. The company acquired Mallers Inc (Mime360) and Letsbuy, expanded logistics reach, broadened presence across new categories including what is arguably the first significant digital music store in India – Flyte, to be precise – and in the process, also boosted its revenue tenfold.

Flipkart clocked revenues of Rs 500 crore in FY 2011-12, a ten-time increase from Rs 50 crore in FY 2010-11. Pretty amazing, isn’t it? But not so for co-founder Sachin Bansal who wants Flipkart to be a billion-dollar revenue company in the next 2-3 years.

Yes, you read that right. You might have already heard that before but here’s the official thing from co-founder & CEO Sachin Bansal (check the graphic for the gist!) who wrote a personal note to all Flipkart employees on the year that went by.

“We had a path-breaking financial year, in 2011-12! Just look at the numbers below (or attachment, depending on how it arrives in your mail)… we have actually created a national brand almost out of thin air! Hats off to all of you for pulling it all off… in amazing style!

The future of e-commerce in India looks very promising. But there’s going to be increased competition and challenges from all directions, given our success. We are now investing heavily in future-proofing ourselves in terms of strategy, technology, infrastructure and most importantly, people.

One critical way we can future-proof ourselves, going forward, is to start thinking about profitable revenue growth, and not just revenue growth. This is a collective effort and it requires everybody to start looking at more efficient ways of doing what we do every day. Here, every little effort helps!

And yes, customer delight remains our single-minded focus, as always. We understand that customer delight is a moving target and we need to be constantly on our toes to hit this target, again and again.”

Check out the graphic below which sums up last year’s business development.

Now that the Angry Birds has now gone to space, we guess that the Flipkart management would be shooting for the stars with a mega leap this year.

We also noticed, Bansal missed out mentioning in the creative graphics above that Flipkart was also a winner of VCCircle Annual Awards 2012 as the Best Venture Capital-backed Consumer Internet company (in case you missed out more on that here)

Here’s a look at what was India’s largest online retailer up to in FY 2011-12.

As far as its presence in the country is concerned, the company expanded its logistics (or FKL, which we deciphered as Flipkart Logistics) to 37 cities from 7 cities in the previous fiscal year. Till September last year, the company had reportedly grown that to 13 cities; so it is roughly doubling its logistics reach every 5-6 months.

In line with its superfast distribution growth, its employee strength has grown four times to 4,800, from 1,200, in a year’s time.

Additionally, the total number of items shipped in FY 2011-12 rose almost seven times, with the company shipping 6.47 million products as against 0.96 million in the previous fiscal. According to back-of-the-envelope calculations, this works out to around 1.79 lakh products shipped every day or 7,490 orders every hour or 125 every minute 17,730 products every day or 739 every hour or over 12 products shipped every minute! (the actual number of orders could be lower as some orders would include multiple products)

Based on total revenues, we would expect the average order size to be around Rs 772, which could appear small. But then remember that the bulk of the sales could comprise books which mark the original product category Flipkart started with.

The company’s customer base also increased more than ten times to 2.08 million from 0.2 million over the past one year while website visits increased to 102 million, from 40 million.

Last year, the company came up with new features like the Flipkart wallet (it allows users to store money with Flipkart and redeem the same to purchase products), EMI facility for payment and product comparison, among others.

The company also added a number of new categories to its product portfolio including audio players, health and personal care products, large appliances, stationery and digital content (in the form of the digital music store Flyte). As of now, Flipkart offers products across 12 categories but even that is not enough as the company is still looking to expand its range of products.

“Going forward, we will continue to expand the range of products available on Flipkart. Everything except groceries and automobiles are fair game for us,” Ravi Vora, VP (marketing) at Flipkart, told Techcircle.in.

So don’t be surprised if in the future you see Flipkart selling apparel, shoes or even toys and baby care products.

Watch out this space for more on Flipkart as it happens.

14 Comments

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Himmath Jain April 24, 2012 18:08

Your estimate of daily sales of FlipKart.com is wrong by 10 times !!.
Per day sales is not 1.79 lakhs, but 17,900 only.

Vivek Sinha April 24, 2012 19:18

Thanks for pointing out Himmath, we got a bit carried away with the numbers. We have corrected them.

Aryan Sharma April 24, 2012 22:48

I thought this article was to be about real stats and growth to profitability however it seems to be an advertisement by the makers and investors of FlipKart. Anyway, it’s about time they start earning otherwise it will be another dot-com bubble in the making.

Manoj April 24, 2012 23:13

A perfect 10 company? It will be interesting to analyse and observe this organisation for the next 2 years.

Sandeep April 25, 2012 0:28

I wish if all competition remain same so that the consumer will have choices and wont have to deal with a monopoly and middlemen which was the case years before. However, i feel flipkart will see profits by 2020 only considering their spent in employees and Ads. Just assume that they sell 200 laptops in a day all over india. and average cost of 35K the revenue from laptops for an year is calculated to 200 * 365 * 35000 = 255 crore and the profit from laptop is not more than 3-4% as every body know.. So the profit from half of the revenue ( 500 crore mentioned above) is just 10 crore that is less than the advertisement budget of an year for Flipkart. You can imagine how they can fed 4000 employees and the office rent and other expenses like delivery charges, payment gateway charges, product return from customers ( 10-20% as specified by flipkart ceo in a TIE forum) etc

Albs April 25, 2012 7:35

I believe they are putting GMV ( Gross merchandise value) as the total revenue figure of 500 cr. This is the total transactions volume. The actual revenue is 10- 12% of GMV or 50 Cr. I am not sure what GMV value means. If thats the, case the payment processing or online jewellery companies has the highest GMV. :)

Jyoti April 25, 2012 9:16

Its good to see the growth here. These are the creators of next gen India. Congrats to the whole team. At any point of time you should not forget your employees and the esteemed customer as both of them can switch quickly.

Cheers

Kannan S April 25, 2012 10:38

If these figures are right, then HomeShop18 is an even larger company that flipkart as per Network18 balance sheet. Their revenue is 800 crores+ if you go by GMV and 120 crore is you go by margins in Network18 balance sheet

kishan April 25, 2012 11:55

I am really thrilled with the progress of Flipkart. I have had the best customer experience with Flipkart and it clearly shows the execution capability of the firm .But having said that ,let’s not forget the likes of Amazon and others will not only increase competition but also impact the margins of the firm. So going ahead Flipkart will have to Innovate to standout from competitors like Amazon.com . I wish all the best and would be delighted to see Flipkart as Global brand .

Ramesh April 25, 2012 12:25

I would be interested in knowing the net margins and if at all there can be any hope there? I don’t see this company as a profitable one in near future unless they increase pricing which is difficult with competitors such as Indiaplaza, Infibeam etc.

yogie r. April 26, 2012 21:35

nice research,enjoyed reading it.

Lefaust April 27, 2012 13:17

I don’t agree with Ramesh comments . If you have scale then the products can be sold at competitive prices you will have advantage to scale diversify your product pro folio.If flipkart get into Apparels/ accessories/footwear like fashion and you there is going to great growth for them.

P Raj April 28, 2012 17:46

The chance of flipkart making profit in near future is really dim considering that they have 4800+ employees on the rolls. Wonder whether they are even making margins from the above revenues that will pay salaries for the 4800+ they have currently got

Arunmozhi Sivam June 7, 2013 11:30

500 Crore is pretty impressive.Any idea about their profit Growth or profit figure?

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