Why you should care

India is one of the fastest-growing e-commerce markets anywhere. Flipkart is the leading player.

Sachin and Binny Bansal are not brothers, or even related. They might as well be. The two live in the same apartment complex in Bangalore’s upper-middle-class Koramangala neighborhood and walk less than a mile to work.

There, in seven years, they’ve forged India’s largest e-commerce platform, Flipkart. It has 14,000 employees and 22 million registered users, and it makes 5 million shipments a month.

Our vision was always to be the Amazon of India.

— Sachin Bansal

“Our vision was always to be the Amazon of India,” Sachin told the India business newspaper Mint in 2011.

Which would be just fine if Amazon itself didn’t want to be the Amazon of India.

In a sort of macho e-commerce shootout, Flipkart said in late July that it had successfully raised $1 billion in venture-capital funding. Just hours later, Amazon CEO Jeff Bezos announced that the real Amazon would pump $2 billion into its India business.

So, who would you put your money on? Well, the Bansals are doing fine, and, while no one can dismiss a challenge from Amazon, it has stumbled in other overseas markets, notably China, where Alibaba smothered it.

By appearance, Sachin and Binny Bansal are unremarkable middle-class urban Indians who came from small towns and made it big. Born and raised in the northern Indian city of Chandigarh, they tested into the Indian Institute of Technology in Delhi.

There, friendship flourished and, after working at Techspan (Sachin), Sarnoff Corp. (Binny) and Amazon India over a period of two years, both quit their jobs in 2007 and pooled in 500,000 rupees to start Flipkart out of a two-room apartment in Koramangala.

“I never wanted to go abroad, unlike most Indians. I wanted to be in India but create something on the Internet using technology that we can create at home, hoard up and make millions of dollars,” Sachin said in that 2011 interview.

Seven years after it was founded, Flipkart looks, in many ways, eerily like Amazon, from the initial focus on books to the current wide range of products, including air conditioners, coffee makers, cellphones and sunglasses — at discounted prices. It’s built an entire delivery system from scratch. And, aping Amazon, it doesn’t seem to care much about profits; it’s had none.

Flipkart succeeded by offering a cash-on-delivery option — a trump card given Indians’ unease with using credit or debit cards online.

Seven years after it was founded, Flipkart looks, in many ways, eerily like Amazon, from the initial focus on books to the current wide range of products, including air conditioners, coffee makers, cellphones and sunglasses — at discounted prices. It’s built an entire delivery system from scratch. And, aping Amazon, it doesn’t seem to care much about profits; it’s had none.

“There are so many nuances that happen within Flipkart that are exactly like what happens at Amazon with a minor Indian tweak to it,” said a former Flipkart employee. A management job interview, for instance, could go on for almost the whole day, involving nine or 10 people, often including Sachin and Binny. “After the interview, the interviewers get together in the room, make a grid on the whiteboard and actually start putting marks and points. Ditto from Amazon,” he added.

The Bansals have avoided the media ever since a 2012 cover story by Forbes India magazine that basically suggested the Bansals were in over their heads. Former employees, wary of burning bridges with Sachin and Binny, agreed to talk only on condition of anonymity. They say the Bansals are humble, grounded and approachable. Sachin, a bespectacled, dark-skinned man with a full mop of hair and a wide smile, spends a lot of time playing video games with trainees. Both are married, in their early 30s, but without kids.

They seem always to be on the same page. “It’s not surprising to see Sachin start a sentence only for Binny to finish it,” said the former executive from Bangalore.

Men inside a distribution center packaging goods and products for flipkart.com

Couriers for FlipKart sort packages at their warehouse in preparation for delivery.

Source Kainaz Amaria/The New York Times/Redux

Flipkart was born after a first wave of e-commerce businesses in India failed to take off in the early 2000s. Low Internet penetration coupled with difficulty with supply chains, modes of payment, storage and deliveries stunted early companies. Flipkart succeeded by starting its own delivery network and offering a cash-on-delivery option to customers — a trump card given Indians’ unease with using credit or debit cards to shop online.

Clubby, central control over the company has annoyed some former employees.

“It doesn’t matter where the product is coming from, it’s always on time,” said Delhi-based photographer Subir Dey, a regular buyer from Flipkart. “Even if [rival] HomeShop18 is slightly cheaper, I’ll still pay whatever Flipkart is charging me because I know that my product will reach me on time.”

Clubby, central control over the company has annoyed some former employees. One former senior executive claimed that key decisions at the company were always taken by Sachin and his trusted lieutenants who’ve known him since school days or the company’s infancy, causing some resentment. “They’d be like lunch par decide kiya, coffee par decide kar liya [just decided over coffee or lunch],” he added.

Indian media have also questioned how the company has raised funding — almost all of it foreign — when Indian law bans foreign direct investment in online retail. To circumvent the law, Flipkart adopted a marketplace model in 2013. It doesn’t own inventory. Instead, it provides a platform for companies to sell products to customers.

Moreover, the seller in almost all cases in an entity called WS Retail — a business-to-business company in which the Bansals have no stake, at least on paper. Flipkart, a business-to-consumer enterprise, acts as an intermediary between the buyer and WS Retail by sourcing the products from it — another circuitous route to duck the FDI regulations.

Earlier this month, the Indian newspaper Business Standard published a detailed report on how Flipkart Private Ltd., a Singapore-based firm, is the ultimate holding company for other subsidiaries and the principal beneficiary of private equity funding. Another report that appeared in the Economic Times in April claimed India’s Enforcement Directorate is investigating Flipkart for possible violations of foreign investment rules.

Still, the Bansals are going strong. Earlier this month, they tied up with Chetan Bhagat, a popular mass-market fiction writer, to sell his upcoming novel, Half Girlfriend . Nexus 5 and Moto G, smartphones manufactured by LG and Motorola, are only available via Flipkart, as are niche, subculture magazines like Motherland . It’s just reached agreement with India’s Ministry of Textiles to provide a retail platform for the country’s handloom weavers.

It’s moving fast to become the “Amazon of India.” After all, wouldn’t you, if you had the real Amazon on your tail?

* This OZY encore was originally published September 10, 2014.

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