Azim Premji VS NRN Murthy OR Amazon VS Flipkart

Amazon NRN Murthy vs Flipkart Azim Premji

India's tech titans and fierce cross-town rivals, Wipro's Azim Premji and Infosys' N R Narayana Murthy, are squaring off in the burgeoning $3-billion e-commerce market space too. Premji has gone with the domestic players; he has investments in Myntra (recently acquired by Flipkart) and Snapdeal while Murthy has placed his bets on global e-tailing giant Amazon.

India's rapidly growing e-commerce market is turning out to be a two-horse race between Amazon and Flipkart.

Earlier this year, the Wipro chairman through his investment arm, Premji Invest, and a clutch of other investors, pumped in about $50 million in fashion e-tailer Myntra. Snapdeal, another e-commerce player, got $100 million in funding from five investors including Premji Invest.

More recently, Amazon and Murthy's family office, Catamaran Ventures, floated a JV to help small and medium businesses join the online bandwagon.

Flipkart makes Its Employees Billionaires

400 Flipkart employees become crorepatis

About 400 employees with stock options at online retailer Flipkart have hit the 'crorepati' jackpot because of the surging valuation of the online retailer.

The bonanza is reminiscent of the times when thousands of employees — among them office assistants, drivers and receptionists — at another Bangalore-based Infosys hit Esop paydirt. "About 400 of the employees who own a stake have now become crorepatis," said a person who has direct knowledge of the employee stock option scheme at Flipkart, which received $1 billion (Rs 6,000 crore) in funding last month, valuing it at $7 billion.

About one-fourth of Flipkart's 7,000 full-time employees own a stake in the company.

At the senior-most level, nearly 20 employees who are at the grade of senior vice-president or above and joined over two years ago are now dollar millionaires, meaning their stock options are worth at least Rs 6 crore on paper. The firm's stock options get vested over four years. Flipkart declined to provide details for the report.

It is the online retail market leader's valuation jump that has led to this wealth creation.

In 2012, the company was valued at about $850 million when it raised about $150 million.

In two years, Flipkart's valuation has grown eight times. For the company's founders, Esops are a conscious attempt at creating wealth for their employees. "While we are competitive when it comes to salaries, Esops offer the opportunity for wealth and value creation," said Sachin Bansal, 32, Flipkart's co-founder and chief executive. "It's a long-term reward for those who believe in the future of Flipkart."

After the IT services industry, ecommerce is now the next big opportunity for employees to create wealth, said Anshuman Das, managing partner at Longhouse Consulting, a recruitment firm that works with startups. "The message going out to entrepreneurs is that wealth creation cannot be restricted to just the founders."

A number of junior employees at Flipkart too hold sizeable stake in the company. This has helped employees like 29-year-old Ambur Iyyappa, a senior manager of customer operations at Flipkart. "I was getting married in 2012 and the buyback allowed me to take care of my wedding expenses," said the graduate of Annamalai University.

Iyyappa, who sold only a part of his stake at the time of the buyback, declined to reveal how many shares he still holds.

He was the second non-founder employee to join Flipkart in 2008. It was only in 2009, the same year that the company raised its first round of funding of $1 million (over Rs 6 crore) from Accel Partners, that Flipkart started providing Esops.

Fashion e-tailer Myntra, which was acquired by Flipkart in May, allowed employees to sell shares at the time of the acquisition, according to a person with direct knowledge of the deal. The company declined to confirm this. Myntra provides Esops to all its core employees, numbering about 600, in functions such as technology and marketing across all levels.

For existing employees like Iyyappa, Esops provide recognition. "Esops are a motivation for us employees," said Iyyappa. "It is how the company recognizes our work."

FEMA Penalty On Flipkart

Show-cause notice on Flipkart - FEMA

The Enforcement Directorate is looking to slap a show-cause notice on e-commerce major Flipkart over alleged FEMA violation, a report by ET Now said on Thursday evening.

The channel quoted sources as saying, "Our investigation is over and our Bangalore team has found evidence of FEMA violation against Flipkart." According to the report, the e-tailer may face a penalty of over Rs 1,000 crore.

A source who refused to be identified said Flipkart had violated FEMA provisions as WS Retail, the holding company, had investments from companies overseas.

The Indian government does not permit FDI in e-commerce currently. In 2013, a year after ED's probe began, Flipkart changed its business model, allowing buyers and sellers to deal independently through its platform.

Flipkart Stores -- Open Now

Flipkart opens an offline retail store

A nudge from employees has opened up a fresh avenue of growth for e-commerce company Flipkart in the offline retail space, besides boosting internal pride in the brand.

A few months ago, Flipkart opened its first brick-and-mortar store called 'Fliptomania' in Bangalore after several employees called for company-branded products on 'sticker', or employee feedback walls.

Flipkart received repeated requests for company-branded T-shirts, coffee mugs and stationery. The Bangalore store is open to both employees and outside customers, and has witnessed heavy footfalls.

Encouraged by this, the company is planning more such stores at its offices in Delhi, Mumbai and Kolkata, besides unveiling its branded products on its website for its employees.

"Deliberately, these products come with a very nominal price tag just enough to cover the cost price," says Arathi Vedantham, director of internal communications, Flipkart. Vedantham, however, did not disclose the revenues or footfalls from the store.

"These products instill a sense of pride and belonging among employees. Quirky things like even laptop stickers are a huge hit," she said.

Some of the employee messages read, "Can we have more of Flipkart branded T-shirts. I want to gift these," added a company spokesperson. Outside customers contribute just 10% to the total store footfall.

Building its brand has a twofold effect on a company — it augments the market valuation and pumps up employee pride. "By owning a brand, in some cases, the market valuation of a company has risen by 1.6 or 1.8 times from its original valuation," says Harish Bijoor, brand expert and CEO, Harish Bijoor Co.

Bijoor cites the examples of soap companies like Marico and Chandrika, which started out by manufacturing soaps for other companies before selling them under their own brand. The companies, he says, became very successful after introducing their own branded soaps.

Flipkart is all set to ride its own success with the Bangalore store. It is now preparing to cater to the next employee request for a baby line of products. So serious is the company's involvement in this initiative that it has hired a young designer, Subin Kurian Verghese, for designing in-house products.

The company spokesperson claims it had never advertised its offline range of products, and that they were a hit among buyers from day one. The Bangalore store sells merchandise like T-shirts, jackets, stationery, apparels and laptop stickers under its brand.

Who Will Win? Amazon Or Flipkart Fight

Amazon And Flipkart Fight, Who Will Win?

 

A day after Flipkart announced that they had $1 billion in the bag as funding, Amazon said they will infuse $2 billion in to India operations and expand the business at a rapid pace. The e-commerce fight between the Indian and the global giant is heating up and here is our take of the whole situation and what the consumers can expect.

Flipkart started off slow in the initial years, but then picked up lot speed after 2010. Consumers would see the Flipkart branding on walls, hoardings in the city and even in TV commercials. The company left no stone unturned to attract web visitors to its platform to buy anything and everything. After electronics and books, the company introduced fashion apparels along with accessories to the customers.

However, everything was not hunky dory. There are numerous reports in the tabloids and on the web that Flipkart is bleeding money. There were also the debatable reports of users getting empty gadget boxes or boxes with stones/bricks in them instead of the laptop or mobile. But, that did not stop the founding partners, Sachin Bansal and Binny Bansal, to make Flipkart what it is today.

Brands such as Motorola and Xiaomi have picked them up as a preferred partner to sell mobiles. Flipkart is an exclusive partner and to purchase phones from these brands one has to come to its platform. These are not available on offline retail counters or any other online store.

The biggest challenge now in front of the Bansals is the world giant in online sales - Amazon.com. Jeff Bezos considers India as a huge and exploding market and so does the country head of Amazon India, Amit Agarwal. The IIT graduate and Stanford alumnus is in charge of the Indian operations and is the man to beat. Amazon has no money constraints and can infuse lot of capital in the country to take the top spot. The introduction of $2 billion, just a day after Flipkart's $1 billion funding in India, speaks of the aggressive stance Amazon has in the market.

Amidst all the hoo-ha, the consumers are in for a treat. Past has shown us numerous occasions as when two brands go head-to-head the consumers are in a win-win situation. The online buyer pie is increasing but both the companies will try to lure the customers with better service, same day deliveries and even in some cases better discounts.

Till now, Flipkart's model has somewhat worked and consumers do come back to this e-tailer for various buying needs. Amazon is fairly new and needs to make a quick mark with the Indian consumers to get the ball rolling. The next two quarters will be exciting for both the companies, let's see what they come up with next to attract the consumers and make a big buck. 

Yesterday Flipkart Now Amazon

Amazon to invest $2 billion in India, a day after Flipkart's $1 billion funding

Jeff Bezos said he will spend $2 billion (Rs 12,000 crore) to grow Amazon's online retail business in India in what amounted to a dare to Indian market leader Flipkart which only on Tuesday announced raising $1 billion in funding from a bevy of global investors. 

This is the strongest indication by the Seattle-based Internet entrepreneur of his intent to battle for top honours in the Indian online retail market where Amazon is on track to record sales of over Rs 6,000 crore in just over a year of operations.

"We've never seen anything like this," said Bezos, the founder and chief executive officer of Amazon. "After our first year in business, the response from customers and small and medium-sized businesses in India has far surpassed our expectations," he said in a statement on Wednesday. 

By making this announcement within a week of Amazon declaring a loss of $126 million on revenue of $19.34 billion in second quarter of 2014, Bezos is seen to be signalling in no uncertain terms his commitment to grow his business in India after having failed to make inroads in the Chinese online retail industry dominated by Jack Ma's Alibaba Group. 

We see huge potential in the Indian economy and for the growth of ecommerce in India. Our team can continue to think big, innovate, and raise the bar for customers in India," he said. Experts said Amazon's salvo is a clear message to competitors that it does not want to play second fiddle to anyone. "They want to be seen as a leader, not as a challenger," said Arvind Singhal, chairman of retail advisory Technopak. 

Flipkart, which is now also backed by Singapore's sovereign wealth fund GIC in addition to existing investors like South Africa's Naspers and Tiger Global Management who led the latest round of funding, has now received over $1.7 billion in risk capital funding. 

Thirty-two year old Sachin Bansal, Flipkart's chief executive officer, said his company, which investors have valued at $7 billion, will use the latest round of funding to "shape the market in a way that we want." The Bangalore company is expected to splurge money on more discounts for customers, make acquisitions, beef up its logistics network and build out greater capability in mobile and payment technologies. "We are confident that as a local entrepreneurial company, Flipkart has the advantage of being on the ground and better connected to the market we serve," said Bansal. 

Amazon's aggression is already apparent - it now sells over 17 million products across 28 categories and hosts 8,500 merchants on its platform -- and that is expected to only increase. Earlier this week it opened five more warehouses, almost doubling its storage capacity to over half million square feet. 

"From day one, our ambition has been to be India's most customer-centric company," said Amit Agarwal, vice-president and country head of Amazon.in. Investments in product categories, logistics, increasing seller base and in mobile technologies will increase, according to the 40-year-old Amazon executive who reports directly to founder Bezos. 

The all-out war in the Indian online retail space is increasingly being fought on the mobile platform. Amazon said about 35 % of all sales in India come through mobile devices while Flipkart and Snapdeal claim that nearly 50% of all transactions are on hand-held devices. 

By stepping up to tell the world about Amazon's progress in India, Bezos wants to assure customers that his company is here to stay while at the same time declaring war on his rivals, primarily Flipkart. 

"It is abnormal for Bezos to talk about numbers. He never talks about investments or top line. This shows how important India is to Amazon. This is completely new," said a senior executive at a consumer internet company who until last year was employed at Amazon. "He wants to show that if Flipkart spends one dollar, Amazon will spend two." 

Rags To Riches

Flipkart's Journey From Rs 400,000 To $1 Billion Firm

In the biggest fund-raising ever for an Indian e-commerce company, Flipkart on Tuesday attracted a whopping $1 billion from its existing investors Tiger Global Management and Naspers.

As per industry experts, the Bangalore-based company is now valued at somewhere between $5 and $6 billion - double the estimated value of $2.5-3 billion in May this year.

Flipkart co-founders Sachin Bansal and Binny Bansal want to make Flipkart the country's first Internet company to be valued at $100 billion.

Flipkart has till now garnered almost $1.7 billion as it battles Amazon and Snapdeal for the top slot.

Here, we present a timeline of Flipkart's funding - how the seven-year-old company that founders started off with just Rs 400,000 - is now worth thousands of crores.

Timeline

October 14, 2008 - Co-founders Sachin Bansal and Binny Bansal start Flipkart with a capital of Rs 400,000

July 15, 2010 - Tiger Global joins with an investment of $10 million

June 16, 2011 - The company announces new logo and gets another investment of $20 million by Tiger Global

August 24, 2012 - Investment of $150 million by Tiger Global and Naspers group, crosses gross sales of Rs 100 crore

July 10, 2013 - Attracts investment of $200 million from Tiger Global, Naspers, Accel Partners and Iconiq Capital, crosses single-day shipment of 1.3 lakh

October 9, 2013 - Another investment of $160 million by Dragoneer Investment Group, Morgan Stanley Investment Management, Sofina, Vulcan Capital and Tiger Global

May 26, 2014 - Flipkart acquires Myntra

July 29, 2014 - Attracted a whopping $1 billion from Tiger Global Management and Naspers

Just a day after Flipkart announced raising $1 billion, e-commerce giant Amazon, too, announced to invest an additional $2 billion in India to expand its growth in the country.