Focus on the development of India's electricity business

Absrtact: Editor's note: Tencent Technology recently sent a special trip to India, during which he visited numerous it, electric and mobile internet companies in India. What is the current state of the development of the Internet industry in a neighboring country that is both familiar and unfamiliar to the Chinese people? Tencent Technology to launch

Editor's note: Tencent Technology recently sent a special visit to India, during which he visited many it, electric and mobile internet companies in India. What is the current state of the development of the Internet industry in a neighboring country that is both familiar and unfamiliar to the Chinese people? Tencent Technology will launch a series of manuscripts for in-depth reports and analysis, this period focused on the development of India's electricity business.

Tencent Science and Technology Zhu Xu Winter August 2 Report

Over the past week, the focus of the global Internet has been on the electricity business. The domestic focus is on the power companies to fight, and the international focus is the Indian market two electric giants competition.

On July 30, Amazon, which has just entered the Indian market for a year, said it would invest 2 billion dollars in the Indian market. It was clearly a response to the day before Flipkart, India's biggest electric dealer, announced a round of 1 billion dollars in funding. It is widely speculated that this round of financing has allowed Flipkart to be valued at $7 billion trillion, becoming one of the world's most overvalued unlisted internet companies.

At the beginning of its inception, Flipkart and Amazon are just a book-selling site, but now it is a company with more than 9,000 employees, more than 22 million users, the annual sales have exceeded 1 billion U.S. dollars in the electric dealer Big Mac.

Its electric business, in addition to its own direct battalion, there are also third-party open platform, and its own logistics services Ekart and online payment services Payzippy also began to operate independently, to other electric companies open. And Flipkart is doing well in the mobile world, with half the sales now being done on the phone.

If you understand the history of Flipkart, this is a typical Indian internet start-up company, and in the entrepreneurial process also borrowed a lot of experience from China. In it can see a lot of Taobao, Beijing East, Fank and other Chinese electric dealers shadow.

Solid start: Financing after a quick balance of payments

Flipkart, two founder Sachin Bansal and Binny Bansal, are top graduates of Indian Institute of Technology (IIT) at the highest level of India's it class, working in the Amazon before starting a business, and have a lot to learn about the electrical business.

In 2007, they decided to leave their businesses. At that time their idea is to do a comparison of the site, but later found that India's electricity quotient is not developed, some of the existing site experience is not good, so decided to change to do the electricity business site, and chose a relatively simple book category as a cut.

But since they were just two people, it was hard to get the other person's trust when they were looking for a partner, and to convince each other that they had to take some breath. So they basics, selected two book suppliers, two logistics partners, and then released the website.

Like most internet entrepreneurs in India, they started off without financing, entirely by taking their own money to start a business. So their primary goal is to balance the budget as quickly as possible. Fortunately Flipkart's user experience was good, in March 2008, they achieved this goal, and recruited two employees, the supplier also increased to 6.

After achieving the break-even, Sachin Bansal and Binny Bansal began to contact investors. Sachin that it would be easier to introduce investment after the balance of payments, and that he could have more power of speech.

Interestingly, since they had not yet set up a company, the first time they met investors asked them who is the CEO, they can not answer. But thanks to the development of the business and the founder's education and working background, they received an investment from the venture capital firm, Accel, in October 2008, and formally incorporated the company, which is a registered location for Singapore, which is also characteristic of most Indian internet companies.

In the first round of financing, Flipkart also had only 20 employees, about 20 suppliers. But after getting financing, Flipkart began to enter the high-speed development track. In terms of business, category expansion is growing faster and capital, the scale of financing is also getting bigger.

From 2009 to 2012, expansion was the Flipkart theme. A second office outside Bangalore was opened in Derry in 2009, and the number of suppliers increased to 50. In 2010, Flipkart the first acquisition of the company's history, acquiring Weread, a website for online book enthusiasts. Over the next two years Flipkart increased the number of commodity categories and more acquisitions.

Learning from China: self-built logistics and payment system

In the process of growth and expansion, Flipkart borrowed a lot of experience from China, Sachin also often come to China and China electric Business company exchanges.

There are too many similarities between the Chinese and Indian markets: a large population, underdeveloped transport, a lagging modern retail system, a lack of reliable logistics systems, and a very low credit card usage rate. But the Chinese electric Business website has solved these problems very well, and has developed very well.

Learning the experience of Chinese electric companies, Flipkart set up its own logistics system, in the big cities will be delivery time within 24 hours, in the two or three-line city can also ensure that 2-3 days to send goods to consumers.

As the Government of India to foreign investment (Flipkart in the establishment of the company and after the investment has become a foreign-owned companies) and the integrity of its own logistics system, Flipkart will be stripped of the logistics system of the company, the establishment of a separate Ekart logistics company. This February, Ekart company also began to undertake other electric Company's logistics and express business. This is very similar to the domestic customer and the wind Tatsu relationship.

But in terms of payment business, the development of Flipkart's payzippy has not been very smooth. The most mainstream Third-party online payment tool is Alipay, the rise of Alipay benefits from Taobao. Flipkart and Taobao is a big difference is that Flipkart would have received payment on the goods, online payment is only an option; But Taobao's users initially have to pay online only, so there is an urgent need for a secure and easy-to-use online payment tool.

Now Flipkart users are still paying most of the cash on delivery, and the entire Indian market does not have a particularly mainstream online payment company.

The Amazon: Open platform and crazy financing

By the second half of 2012, Flipkart had basically established the status of India's largest electric company. So the company began exploring other areas, such as digital music. This is in fact similar to Amazon's development, and Amazon is also in the field of digital books, digital music and video when the real business is bigger.

However, Flipkart's digital music service, which was launched in 2012, was closed for more than a year because of the different market conditions. Flyte Sachin said at an event that people go to digital music pages 6 times times as much as traditional CDs, but digital music earns only one-third of traditional CDs, and "Users tell us what they like." He also said he thought that digital music would never be popular in India, "if it is only temporarily not developed but there is room later, we will not close Flyte." ”

Of course, in addition to exploration in other areas, Flipkart still faces a host of rivals in the field of electrical business, the biggest competitor of which is the Snapdeal of an ebay-funded platform earlier this year.

Snapdeal was founded in 2010 and headquartered in Mumbai, India's financial centre, with two founders from the Wharton School and the Indian Institute of Technology, as well as the background. First Snapdeal do is a partial physical group buying business, in September 2011 formally transformed into a platform for the electric business.

Before 2013, the business model of Flipkart and Snapdeal was similar to that of the early Beijing-east and Tian-cat, one was a self-electric dealer and the other was a platform of electric commerce. Just as the BoE later made an open platform, Flipkart officially unveiled its own open platform in April 2003 and is only open to businesses (that is, the cat, not Taobao). The number of businesses on the Flipkart platform is now over 3,000, but Snapdeal has more than 20,000 sellers.

But Snapdeal is not Flipkart's biggest concern, and Amazon, which entered the Indian market in June 2013, is Flipkart's largest competitor. For Indian policy reasons, Amazon is also doing business in India rather than selling products directly.

Amazon announced that it would invest $2 billion in India the next day after Flipkart announced 1 billion dollars in funding this year July 29. Amazon CEO Bezos said in a statement: "At the current rate of growth, India will be our country with the shortest sales volume of 1 billion dollars." ”

The challenges facing Flipkart are just beginning.

But Flipkart need not be too tense. After all, in the past year, they have had many rounds of huge financing. From July 2013 to July 2014, Flipkart received a total of 4 rounds of financing (or a tricycle), up to $1.53 billion trillion in financing. Investors include investing in Alibaba's Tiger fund and investing in the capital's DST.

In the Chinese market, Alibaba and Jingdong are stronger than Amazon in the electric business field, the Flipkart of learning Chinese experience can do the same result in India, still need time to test.