Well, there are two happenings, every tech enthusiast should be aware of. First is the fact that Amazon has reached annual sales of $ 100 billion and it has done so in the minimum amount of time. Which means, no other company could touch the revenue of $ 100 billion in a period as short as Amazon. The other news is not good; especially if you love Indian start-up Flipkart and the two Bansals who run it. Flipkart is down-priced by investors and is struggling to grow at the pace it targeted.
If one looks at these two news together, one has to ask the question- What separates Amazon from Flipkart?
Amazon, though it reported profits only recently, is growing for sure. Amazon was not in loss due to lack of business I would say; they were in loss to grow further. It seems, this long term strategy has paid off and Amazon has started reporting profits. Moreover, its AWS business is growing at a pace even faster than Amazon itself; but I will touch on that sometime later.
Flipkart, on the other hand, has a different story to tell. It probably faces a downround, where investors buy a company’s stock at a valuation lower than the previous round.
What is the reason behind drastically different fate of two companies operating in similar market on similar principles?
Amazon and Flipkart work on an almost same principle. But, if one observes carefully, one realizes that there are many things that separate the two companies. Just having a similar business model is not enough. Personally, I feel, Amazon is doing a much better job in terms of delighting the users.
Take my own example. I earlier used to order from Flipkart without fail. I never thought of buying from Amazon. But sometime, I could not find what I was looking for on the Flipkart website and bought the item (it was most probably a book!) from Amazon. After that point, I found Amazon to be more user friendly, easy to use. Now I hardly buy anything from Flipkart.
Keep aside my story. I suppose this might have happened with many more users. To build on this, I think following are the couple of things that separate Amazon and Flipkart.
- Continuous improvement and experimentation: I respect Jeff Bezos for this. Those of you, who do not believe me, please take out ten minutes to read his letter. Jeff has ensured that Amazon nowhere stagnates. Amazon is working on so many fronts; they are taking small steps but are ensuring that the improvement never stops.
What we see as success at Amazon is actually a product of insane experimentation and maybe countless failures. Amazon has managed well to keep its people on their toes, all trying to find out something new, which might or might not work.
For instance, to grow Amazon Marketplace in India, they did this-
India is another example of how we globalize an offering like Marketplace through customer obsession and a passion for invention. Last year we ran a program called Amazon Chai Cart where we deployed three-wheeled mobile carts to navigate in a city’s business districts, serve tea, water and lemon juice to small business owners and teach them about selling online. In a period of four months, the team traveled 15,280 km across 31 cities, served 37,200 cups of tea and engaged with over 10,000 sellers.- Jeff Bezos
This is what I call as taking extra efforts to accomplish something. This is an example of doing something out of pure passion and not just to churn profits.
- A strong philosophy: Amazon is not just an etailer. They are not just people who made an App and market it. They are working very hard on their packaging, delivery, customer delight, energy conservation, sustainability and hundred more things at a time. The above excerpt from Jeff Bezos’ letter is enough to show the spirit to act as per the philosophy.
Sustainable business has to be a part of philosophy of any enterprise. This is another excerpt from the letter from Jeff. Don’t you think this is really commending work? No one was forcing them to do it; but they realized it and took the responsibility and simply did it. I am not aware of anything of this kind happening at Flipkart; please let me know if you know.
We’ll keep expanding our efforts in areas like packaging, where our culture of invention led to a big winner – the Frustration-Free Packaging program. Seven years ago we introduced the initiative with 19 products. Today, there are more than 400,000 globally. In 2015, the program eliminated tens of millions of pounds of excess packaging material. Frustration-Free Packaging is a customer delighter because the packages are easier to open. It’s good for the planet because it creates less waste. And it’s good for shareholders because, with tighter packaging, we ship less “air” and save on transportation costs.
Amazon has found out the converging points of what is good for environment, customers and the company itself and it tries very hard to leverage on those converging points. As mentioned above, packaging helps not only the environment, but also the company itself.
Same day delivery, drones for delivery are good moves and they help the business. Improving packaging too helps business to a certain extent but the major benefits are related to sustainability and not monetary. Amazon targets to be fully dependent on renewable energy and their wind farm is a step in that direction. Very smartly, they have figured out keeping everyone happy- environment, customer and also the share holders.
Another advantage of having and working as per a strong philosophy is, it reduces human resources related issues. Flipkart is troubled by the resignations from its top management. Something like this happens when people join an organization and later realize that they have a very different philosophy or work culture. At Amazon, the culture and the philosophy is very well defined, which results in hiring talent which is well aligned to it.
I am not at all saying that Flipkart is just an ordinary etailer. It takes lots of efforts to build something as big as Flipkart. But, to go beyond that, to break the wall, one has to have
a strong philosophy
A culture of risk, innovation, improvement
Commitment to philosophy and consumer delight.
To conclude, a business can never succeed simply by having an App and marketing it. You need something great, really great at the back of it. You need to have a philosophy which determines your further actions and direction of the further improvement. Amazon has found out what that ‘great’ thing is. Has Flipkart found it out?