How Flipkart's Kalyan Krishnamurthy is taking the fight to Amazon

BENGALURU: Two days before online marketplace Flipkart kicked off its Big Billion Days sale earlier this month, Kalyan Krishnamurthy addressed top managers at the Bengaluru-based company. India's most valued internet company had been preparing for the sale for over three months under Krishnamurthy, a managing director at Flipkart's largest shareholder Tiger Global Management who rejoined in June.

“This season, we will clear all speculations and win like an undisputed market leader,” Krishnamurthy told the group at its main headquarters here. “The tech systems have been tested, we have the best offers and supply chain capabilities. There is no reason to fail,” he is reported as saying by a person who attended the meeting.

As it turned out, the Big Billion sale was an unqualified success, according to internal assessments as Flipkart was able to beat its targets and regain momentum in its battle for market leadership against Amazon. Company executives, analysts and investors said that Flipkart’s gross sales topped Amazon’s by a substantial margin.


“More importantly, in the last month organic growth across all metrics went up and that's what given investors confidence about keeping Flipkart’s leadership against Amazon intact,” said a top executive in the company.

Krishnamurthy, a former interim CFO and the head of category management, is taking the fight directly to Amazon. While Big Billion Days is one of the most important sales milestones, Flipkart said the company has seen a 30% improvement in revenue on business as usual days. And Krishnamurthy is being credited with Flipkart's comeback as he was able to sign up exclusive smartphone deals and large appliances offers.

Krishnamurthy is done celebrating and has now turned his attention to relaunch categories like fashion and furniture in the coming months. On the cards is a much bigger sale in December and possible entry into fast-moving consumer goods (FMCG) next year, according to three top executives briefed on the matter.

"Kalyan is not leaving for the next few months. He plans to go deep and relaunch few other categories over the next few months," said one of them. "The focus is expanding selection, build merchant relationships and improve customer experience. Fashion is next, then furniture and in the end large appliances."

Improved performance in these categories will be critical, as these segments have better margins and higher ticket sizes, which in turn will help Flipkart woo investors over next 3-6 months, including US retail giant Walmart.

"Flipkart needs to show growth and a path to profitability to get investors excited. It will need new funds soon. Focusing on high-value products helps deliver on that growth," said Kartik Hosanagar, professor at The Wharton School.

Flipkart's dependence on smartphones to deliver blockbuster growth was visible during this Big Billion Days as well, as phones accounted for about two-thirds of total sales, similar to last year.

Flipkart's share of smartphone sales was at 47.5% in 2015 and slipped to 40% in the June quarter of 2016, even as Amazon India's share jumped up from 21.5% to 32% in the same period, according to data from Counterpoint Research. This was primarily because brands like Motorola, Xiaomi and Lenovo, which were earlier selling exclusively on Flipkart exclusive, started launching their new phones on Amazon.

Krishnamurthy has personally led Flipkart's comeback in this key category, according to top executives. "Things like attending and closing mobile exclusive deals etc are all the jobs of director-level executives, but Kalyan did that himself because he knew it was important and won the category for us. He closed the Apple contract too," said a source.

Some of the work towards the relaunch has already started. Company executives say there has been a five-fold increase in sales compared to a normal day in branded fashion. The large appliance category has been growing 8-9 times this month compared to regular days.

"Our more serious play in furniture is yet to come as we believe in fixing the service aspects of the category, like after-sales, which could be a differentiator," said Smrithi Ravichandran, director of category design management at Flipkart.