Pressure on Flipkart to maintain momentum

RedSeer E-tailing Leadership Index shows while Flipkart’s net promoter score has improved, it continues to face a relentless assault from Amazon India which has greater spending power


Flipkart’s resurgent Big Billion Days sale performance has given it a springboard to take the fight to Amazon and also raise its next round of funds. Photo: Ramesh Pathania/Mint
Flipkart’s resurgent Big Billion Days sale performance has given it a springboard to take the fight to Amazon and also raise its next round of funds. Photo: Ramesh Pathania/Mint

Bengaluru: While Flipkart’s net promoter score (NPS) has improved consistently over the past few quarters, the e-commerce giant is under pressure to retain its current momentum as it faces a relentless assault from Amazon India, which has deeper pockets in terms of spending power.

Mint reported on 9 August that Flipkart had set out to achieve three key goals, among others, by September. One, generate monthly gross sales of Rs3,700-3,800 crore by expanding sales of smartphones, large appliances and fashion; two, achieve an NPS of 55 partly by improving the speed and consistency of product deliveries, and improving its product returns management; and three, break even at the gross profit level by cutting staff costs, discounts and other expenses.

While its NPS scores have improved considerably over the past three months, the company is still behind on some of the goals it had charted out earlier during the year, according to company executives.

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Flipkart’s resurgent Big Billion Days sale performance has given it a springboard to take the fight to Amazon and also raise its next round of funds.

“What happened in October was a culmination of a lot of things that we’ve been doing over 8-10 months: innovations in marketing, merchandise planning, our focus on the core categories, supply-chain cost optimization, and technology—the front-end technology was completely flawless. ...then a lot of these things such as no-cost EMI...scaling that up, and scaling up product exchange. So, it’s about having the right customer focus, the right local knowledge, the local innovations for the customer base—we need to continue doing that, and we will continue doing that. You will start seeing a lot of that,” Flipkart co-founder and chief executive Binny Bansal said in an interview on 2 November.

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In October, Flipkart (including its fashion units Myntra and Jabong) generated gross sales of more than Rs5,000 crore, while Amazon India’s gross sales in the month were Rs4,000-4,500 crore, Mint reported on 2 November.

Flipkart now plans to hit the market to raise a new, large round of funds before the end of the year, Mint reported on 8 October. The e-commerce “unicorn”—as a start-up valued at $1 billion is known—will look for new investors to lead the next round and look to raise up to $1 billion in fresh funds.

Bansal, for his part, indicated that investors might be more willing to meet Flipkart’s terms whenever it decides to raise funds next, adding that the e-commerce firm is in no rush whatsoever to raise money.

“From a fundraise perspective, we’ve always said Flipkart likes to raise funds when they are available than when we need them. And we have raised enough money in the past, so there is no rush. We keep talking to investors all the time, and I think when there is a right match of expectations from both sides—that’s the way we like to raise funds,” Bansal said in the interview in November.

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