BackFrom Amazon to Alibaba: Flipkart adopts new role model
Flipkart founders say their new role model is Alibaba and that the Indian market, customers and income levels are quite similar to that of China
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Bangalore: Flipkart.com is changing its role model. India’s largest e-commerce firm had originally based its business model on Amazon.com Inc., where the company’s founders Sachin Bansal and Binny Bansal (no relation), used to work.
Now, however, the company role model is China’s Alibaba Group, chief executive officer Sachin Bansal said. Online marketplace Alibaba, which is about to go public in the US, dominates e-commerce in China, through its sites Tmall and Taobao.
Flipkart started out in 2007 selling books online, just like Amazon in 1995, and then added electronics and other products in 2008.
“Back in 2008, Amazon was the dominant player in the world and that was the role model. But we believe India is different and we’re going to play in a different way," Bansal said on Thursday.
“Our role model now is the Alibaba Group, more than Amazon. We believe that is the model for India and more suitable than anything else. The market is similar, the customers are similar, their thought processes are similar, their income levels are similar, and the whole supply and distribution are similar if you compare China of a few years back."
Bansal was speaking to reporters at a press conference where the company announced it was buying online fashion retailer Myntra.
Until last year, Flipkart owned the goods it sold on its site. But because of Indian law, which prohibits foreign direct investment (FDI) in online retail, in February 2013 the company moved to a marketplace model, where third-party merchants sell goods to shoppers through Flipkart’s site.
The marketplace model allows e-commerce companies to scale much faster and save on storage and other inventory-related costs as the products are held by the merchants.
Amazon itself uses a mix of marketplace and direct online retail. The company launched its India marketplace last June and is seen as the biggest threat to local e-commerce firms.
Bansal said he visits China and meets with e-commerce entrepreneurs there to improve his understanding of the market and apply some of their best practices in India.
“I’ve visited China many times and I know most of the e-commerce entrepreneurs. It’s pretty different from the way it’s happened in the US. So there are a lot of learnings from China that we are looking to apply here. It’s not going to be an exact copy and we’ll find our own path but there are learnings," Bansal said.
Alibaba is on course to list its shares in the US in an initial public offering (IPO) that could exceed $15 billion and value the Chinese company at $200 billion, according to media reports.
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