Oliver RippelContributorShare on TwitterOliver Rippel is the chief executive officer of Naspers' global business to consumer subsidiaries and investments.
Two weeks ago,Walmartconcluded its investments to acquire a majority stake in Flipkart.This is one of the largest transactions in e-commerce and in the internet space globally, with Walmart deployingUS$16billionto obtain an approximate 77 percent shareholdingat closing.
As part of this transaction, my company,Naspers,exited fully, selling our11.18 percent stake for $2.2billion.Walmart confirms $16B Flipkart investment, giving it 77% in India e-commerce leaderIn addition tothe obvious financial success — a3.6x or $1.6 billion absolute returnin six years — being partofone ofthe greatest successstoriesof the Indian and global e-commerce market led to countlessinsightsforNaspers.Our journey with Flipkartwill help usto furthershapehow wepartner with entrepreneurs to build leading technology companiesin the future.I was fortunate enough to havehada front-row seatatFlipkartforthe past six years, leadingourvarious investment rounds and being Naspers&appointed board director.
Here are some of the key lessons that Iwill remembermoving forward.Pursue big market opportunities and solve big problemsE-commerce is a global trend that manifests in every market around the world.
The potential of Indian e-commerce is beyond any doubt,with atotal retail marketofmore than $500 billion.Before Flipkart,Indiane-commercecustomers were repeatedly disappointed by mediocre selection, low product quality, little flexibility in payment options and a lengthy delivery experience.Flipkart was the first player to solve these issues at scale, opening up the marketplaceto morecategories (starting with media and then rapidly expanding into electronics, lifestyle, etc.), offering warehouse services, and introducing its own courier network,Ekart,that ensured customer delightand cash on delivery.Other playerseventually offeredsimilar services, but Flipkartwasthe pioneer.Market leadership is key to sustainable success, even in e-commerce, which tends tohave&winner takes most&as opposed to&winner takes all& characteristics.Leadersenjoyattention fromsellers,buyers, as well as existing and prospectiveemployees.They continue to innovate while laggards are trying to catch up.Throughoutour six-year journeywithFlipkart,the company was in a market leadership position against strong competitionfrom global and localonlineplayers.Given the rapid growth of the Indian e-commerce market, Flipkart had to scale its tech platforms while also scalingitsbusinessmodelandorganization.This is hard to do, and we&veseen many businessesfailto scale.
Flipkartwasnot one of them.As a market leader and pioneer in the Indian e-commerce market, Flipkart had to sailunchartered waters.Experimenting while increasinginscalecarried significant riskfor the organization and had consequencesforthe market — Flipkart made many bold decisionsover the years.
Many of these worked out beautifully, such asacquiring Myntrain May 2014to obtain a strong position in thestrategicfashion and apparel category,or establishing Big Billion Day as the marquee sales event of the year.Indian Ecommerce Giant Flipkart Buys Fashion E-tailer Myntra To Fight Amazon GrowthThere were others thatdid not work out, like trialing app-only shopping, but these failures never deterred the team fromtakingchancesandchangingcourse if needed,while always capturing thelessons.In the end, the app-only move allowed the company to becomemobile-centric and a clear innovation leader in this area.Think globally, but act locallyFlipkart is focusedon the Indian market,but thecompetitive battleforsellers,buyers and talent is fought globally.The teamadoptedglobal best practiceslikeBig Billion Day, which was inspired byideas from the United States , China and Romania.Alibaba smashes its Single Day record once again as sales cross $25 billionThey also measure success based onKPIs constantlydrawing comparison withglobal market leaders.
Most importantly though, Flipkartalways innovatedfor the local market, takinglocal tastesinto account(as serviced by the multitude of private label brands at Flipkart andMyntra), as well as bandwidth and affordability constraintson the customer side, leading to super-light mobile sites and apps,as well as various trade-in and financing programs.Play the long gameDespite multi-billion-dollar trading volumes, thecurrente-commerce market in Indiaisstillmostly driven by affluent metro city dwellers in placeslikeMumbai, Delhiand Bangalore.
This is not dissimilar to what we&ve seen in other countries around the worldat a similar development stage as e-commerce in India.However, to really unlock the potential of Indian e-commerce, one has to reach the hundreds of millions of customers that live in tier-twoor -threecities, or in the countryside.This will require a very unique approach in terms ofselection, price points and delivery and payment mechanisms.Flipkart management spendsaconsiderable amount of timestrategizingabout thesechallenges.The common thread in all of these lessons is that you need to havestrong,inspiring leaders who come from the local market and have the vision and desire to scale their platforms responsibly and skillfully.
Whether it wasBinny and Sachin asco-foundersofthe business, or Kalyan, Ananth andSameer in leading the respective Flipkart,Myntra andPhonePebusiness units, without these leaders it would have not been possible for Flipkart to grow to what it is today.
I&m very grateful for my time with Flipkart and wishthe teamand Walmart all the best in continuing this incrediblejourney… a journeymade in India.