May 10, 2018, was an emotional day for Binny Bansal, the co-founder of Flipkart, India’s online e-commerce company based in Singapore with an office in Bengaluru. His friend and IIT-Delhi batch mate Sachin Bansal, with whom he had started the company, decided to exit the venture by selling his 5.5 per cent share for close to ₹65 billion (USD 1 billion), and it pained him.
A few hours earlier, Sachin had posted on Facebook that his work at Flipkart was over, and the time was right to hand over the baton (The Tribune, 2018) and move on. A day ago, Walmart, the American retailer giant, announced that it acquired a majority stake of 77 per cent in Flipkart for ₹1,040 billion (USD 16 billion). At a media briefing (The Times of India, 2018), Binny explained how he tried his best to convince Sachin to stay on but had failed in his attempt.
Flipkart was launched as an online platform for selling books by the two Bansals with an investment of ₹400,000 (USD 6,000). It got its first customer in October 2007 when a tech blog writer clicked on the flipkart.com link below Sachin’s comment on a post that he had written and ordered the book Leaving Microsoft to Change the World (Bansal, 2018). The initial marketing efforts by the duo included waiting outside Gangaram Book Bureau on Church Street in Bangalore (Soni, 2014) and handing out Flipkart bookmarks. The bookmarks were given only to the people coming out of the shop with books in their hands to ensure their targeting was right. Logistics management meant the two founders riding on Binny’s motorbike for 40–50 km (25–31 mi) daily to pick up books from distributors and packing them to send to the customers.
Sales started picking up, and a couple of years later, Accel Partners, the American venture capital firm, invested ₹65 million (USD 1 million) in Flipkart (Accel, 2018). Flipkart started adding more products like movies, games and music along with books, but its revenue of ₹250 million (USD 3.8 million) in 2009–10 was still due to focusing on selling around 5 lakh (half a million) books in the previous two years. To add e-books to its portfolio and encourage recommendations to consumers based on their purchases, Flipkart acquired weRead.com (Afaqs!, 2010), a social network–based book discovery, recommendation and review site with more than 3 million users, 60 million books and 2.5 million reviews.
In 2010, New York-based investment firm Tiger Global Management invested around ₹520–650 million (USD 8–10 million) in Flipkart and a total of ₹65 billion (USD 1 billion) in the company over several tranches till 2015, owning an estimated 30–33 per cent stake in the firm and eventually making it the largest shareholder (Chanchani, 2010; Sengupta, 2017).
In 2012, Sachin Bansal announced Flipkart’s acquisition of Letsbuy.com (Sharma, 2018), a competitor e-commerce website that sold consumer electronics. With heavily discounted prices and a huge product catalogue, Letsbuy had received investments from major global investors but was not profitable. Interestingly, the acquisition for an estimated ₹1,620 million (USD 25 million) was initiated by Tiger Global and Accel (Dharmakumar, 2018), who were the investors in both Flipkart and Letsbuy. While Letsbuy staff was laid off, the two investors got additional shares in Flipkart.