No investor has more to lose from the potential implosion of Indian e-commerce company Flipkart than its biggest backer, New York's Tiger Global Management.
Last summer, with Flipkart Online Services Pvt losing ground to Amazon.com Inc., Tiger sent in former EBay executive Kalyan Krishnamurthy to help turn around India's most valuable internet startup. The two co-founders stood aside as Krishnamurthy took control of its biggest sale season, fired senior managers and set tough traffic and sales targets. After Flipkart narrowly outsold Amazon during the critical year-end shopping rush, he was named chief executive officer, the company's third in the span of a year.
In a rare interview at Flipkart's headquarters in suburban Bangalore, Krishnamurthy, a boyish 45, sipped water and projected steely resolve. "We feel great about where we are," he said.
Inside the Flipkart headquarters in Bengaluru.
Krishnamurthy points out Indians spend only about $10 on average per online visit, compared with about $40 in the U.S. One way to boost sales is to sell groceries, a reliable tactic to persuade consumers to shop more often. Flipkart has plans to enter the market shortly, but that will take time to build, and Amazon, which already sells fresh food at home, is staking out the same territory. Flipkart has opened up a big lead in apparel, cornering almost four-fifths of the market. But Amazon has made similar moves in the U.S. and could follow suit in India.
Despite the challenges, Flipkart and other Indian startups are still tempting investors. "India is the world's largest, most secular e-commerce market and so long as startups show they are slogging a path to profits, investors will always be there," said Ravi Gururaj, a Bangalore entrepreneur and co-founder of the India chapter of Harvard Business Angels. "Who can afford to ignore a market that is already bigger than the largest market in Europe?"
As India's biggest e-commerce player, Flipkart is counting on having the resources and market share to stay in the game for a few years. The question is whether it can fend off Amazon or Alibaba over the long term. "Others' aggression is of no consequence as innovation is the real aggression," Krishnamurthy said in the interview. "Throwing away money will not make someone win."