Sramana: At this point, India has developed a digitally savvy consumer base which is very affluent. How will this impact the future of Flipkart?
Sachin Bansal: I expect that people will adopt e-books, but at a rather slow pace. The digitally savvy consumer base may have money, but most of them have the same background as ordinary Indians and have kept some of that mentality. They are misers. They want reassurance that if they give their money to a company, they will either get the product or receive their [money] back. E-books make for a very quick purchase cycle, so that helps, but the price of the devices must drop.
Sramana: What is the size of the e-commerce market in India? How many consumers are buying and selling online?
Sachin Bansal: It is still a small population. I do have a lot of hope, however, because travel and education are both very strong online markets in India. It is estimated that in the past year 2 million to 3 million people have transacted online in India.
Sramana: Does that include the online travel market?
Sachin Bansal: It does not include that market, and overall it is a rough estimate.
Sramana: Based on your customer base and your knowledge of their behavior, what do you think will happen over the next five years?
Sachin Bansal: We see the market doubling in size. As a company, we expect to have a customer base of ten million people.
Sramana: How will you attract this customer base? Are you still focusing only on SEO, or are you advertising as well?
Sachin Bansal: We still do not spend a lot of money on marketing. Word of mouth is our strongest method of advertising. We have a very high customer retention rate. Those same customers bring us the best quality new customers, and most of those new customers become repeat customers.
Sramana: You have now decided to take venture funding. What was your reasoning for that decision?
Sachin Bansal: We determined that now is the ideal time to capture the market. Most companies have not figured out how to do e-commerce in India, while we have figured out how to do some things right. We want to use this funding to build a long-term business.
Our plan is to use the money we raised from the VCs to invest in growth. We need to expand our infrastructure to support e-commerce. We also need to improve our physical warehouses throughout India.
Sramana: What has been your experience with the logistics infrastructure in India?
Sachin Bansal: The delivery infrastructure is not in good shape, and it is the largest challenge we face today. We are working with all delivery companies in India, and we are working to help them become better. We do not know about logistics, but we do know about customer service. We provide input to our delivery companies about their performance and how it impacts our customer experience. Nobody has ever thought about customer experience in India.