Flipkart banks on tech to rope in next million

Flipkart Chief Executive Officer (CEO) Kalyan Krishnamurthy. REUTERS

Flipkart, the homegrown ecommerce platform founded by IIT Delhi alumni Sachin Bansal and Binny Bansal for selling books in 2007, is today the leading light of India’s ecommerce industry with 100 million registered users.

The company, which aims to be a $100 billion company within a decade (the target it set in 2014), is all set to harness frontier technologies like artificial intelligence (AI), machine learning (ML), deep learning, neural language, data analytics, robotics and language analytics to realise its next set of goals.

Flipkart had to confront unique Indian context of two segment of buyers and sellers on its platform. The one is an impatient new generation brought up on internet and mobile apps and the other contesting shopper generation preferring touch, see and feel products before investing their hard earned money. The company believed that it can resolve it buy giving easy access to product and unique experience via tech capability. 

Flipkart innovation since 2007 has changed the way India shops, and inspired legions of businesses to follow in the trail that Flipkart has blazed. Flipkart made disruptions in ecommerce with its initiatives like cash-on-delivery (CoD, 2010), Next Day Delivery (2013), ‘Big Billion Day’ shopping festival (2014), reinvented easy return policy, exclusive online- only product launches, no cost EMI- 2016, easy product exchange- 2016 and assured buy back (2017).

The company today accounts for 40% of India’s overall e-tail industry sales of $17.8 billion, according to advisory firm RedSeer Consulting.  Flipkart, instead of realising its dream on its own, is now set to sell itself to Walmart Inc for a valuation of around $20 billion. Flipkart is at an advantageous position having acquired a large database of 10 million active monthly users over the last decade.

India’s ecommerce market is set to touch $200 billion in a decade. The acquisition of Flipkart would give Walmart a big entry into online space. Flipkart has also established a leadership position in all the major segments of the online retail market, both in consumer space and also seller space. Flipkart, which raised two mega funds in 2017 -- $1.4 billion from eBay, Microsoft, and Tencent in April, and $2.5 billion from SoftBank in August, considers it as a watershed year that helped it to re-position itself. It is planning to make use of its 10 years of user profile to further enhance its customer experience.

Application of data

With massive number of consumers and sellers coming to its platform, the company is using the power of technology to transform itself into a technology giant. The company is investing heavily on ML and AI to ensure that its back-end technologies are able to scale along with its fast-growing online retail business. As part of the strategy, the company invested in last June $25 million in F7, a Silicon Valley startup. Flipkart is also planning to invest in data analytics and robotics startups.

In an effort to come up with solutions for unique problems, Flipkart has come up with a new initiative ‘AIforIndia. It also expects that it will help the company strengthen its business application for various offerings. Mayur Datar, who joined Flipkart in 2015 after working for 12 years in Google, is heading the initiative as Chief Data Scientist at Flipkart. He is supported by chairman and co-founder Sachin Bansal and Chief Executive Officer Kalyan Krishnamurthy. Flipkart also has an AI project which is named as Mira.

Application of data science is critical across Flipkart’s various verticals and the company has been investing for the past three years in data science. “It has grown exponentially for the past six months and doubling down our investment in AI and ML as technology. It will help us achieve more profits, be more efficient via throughput and output,” said Datar.

Flipkart CTO Ravi Garikipati has expanded the technology team to further give boost to in-house innovation. It has a team of 30 data scientists. The company is also aligned with technology innovation of its investor Alibaba. Flipkart believes new technologies will help it control massive customer traffic on its app, manage data centre, seller services, in house brands and data mining etc. “Besides helping us to optimise shipping cost and where to stock a merchandise, data analytics helps us in profiling the customers and what should be the price point for a particular item. The primary focus of data science is on merchandising, recommendations and search,” he said.

Datar said the company is focusing on intent aspect of customers and is availing all means to enhance discovery features of Flipkart app like any other internet company. “We are looking at various options in discovery via internal advertising, also called merchandising. We are also improving our cataloguing system to connect consumer to products,” Datar said.

To make search much more result oriented, the company is focusing on personalisation with the help of ML. “When the order is taken, as part of post order initiative we will look at his previous history. As a company we succeeded in reducing frauds if a consumer has a long history of drop in cash on delivery,” he said.

The effect of competition

The company’s strategy to invest on technology is necessitated by the competition. Besides Amazon, Indian ecommerce is also witnessing competition from local players like Paytm Mall, ShopClues, Infibeam, and BigBasket. According to ecommerce analysts, Flipkart’s technology is not so robust like its immediate competitor Amazon, especially in catalogue management system, seller engagement, global outreach etc.

Flipkart is looking at offering high value to the customers via right kind of interfaces. “Large part of India we know that people are illiterate and they can’t write. But now English is the only language via which we can type and communicate with Flipkart. Can we imagine Flipkart app which can talk to the customers and understand their vernacular language?”he asks. The Chief Data Scientist is optimistic that the company will develop algorithm which will recognise language and various dialects. The company is building private label, especially Billion, backed by AI tools for analysing product review. Here Flipkart is looking at customers’ product recommendations, preferences, regional tastes by the AI tools to analyse reviews.

The insights that Billion products are finding less returns than other products in the platform. “Besides helping in the conversational search, visual similarity, last-mile delivery, Flipkart is banking on AI tools for fraud detection, enhancing security features, personalisation streamline warehousing,” he said.

Flipkart is well aware that ecommerce is a low margin business. So the company is all set to bring in efficiency and scale so that quality and affordable products can be given to masses with low price. Flipkart is going ahead with its game plans to harness technology so that it will have a cascading effect on its business.

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