Flipkart CEO Krishnamurthy Invests in B2B E-Commerce Firm Moglix

In his first solo personal investment, Flipkart chief executive officer (CEO) Kalyan Krishnamurthy has invested an undisclosed amount in Noida-based Moglix, a business-to-business (B2B) industrial goods marketplace backed by Ratan Tata and World Bank's IFC.

With this investment, Krishnamurthy joins Moglix’s individual investors that includes Jeff Epstein, former chief financial officer at Oracle, and Vikrampati Singhania and Shailesh Rao, ex-vice presidents at Twitter and Google, respectively, among others.

“I am happy to join the Moglix team as an investor in my personal capacity. Moglix, under Rahul’s leadership, has charted impressive growth in the B2B commerce space and is creating meaningful impact on the manufacturing industry through innovative use of technology. It is gratifying to be able to support this home-grown industrial B2B leader at this important juncture,” Krishnamurthy said in a statement.

It is not immediately clear whether Krishnamurthy will take an advisory role at Moglix or if the deal is a precursor to a potential business alliance between Moglix and Flipkart, India’s largest business-to-consumer e-commerce firm.

Started in 2015 by a former Google executive Rahul Garg with an aim of bringing in revolutionary and exciting solutions to the global e-commerce, Moglix.com is an online platform and a one stop shop for almost all the need of Industrial Tools (Power Tools, Hand Tools, Adhesives, Safety & Security and Electricals).

Rahul Garg, Founder and CEO, Moglix said, “It’s great to have Kalyan back us as an investor and join an illustrious list of global investors who have believed in Moglix’s potential. Kalyan has played an important role in shaping e-commerce in India and his experience in scaling businesses will serve as a guiding light for us as we execute on our vision to transform B2B commerce and the Indian manufacturing sector using technology and innovation.”

Moglix, which competes with Tolexo and Industrybuying,  has raised a total of $39.2 million in funding over six rounds, according to the data by Crunchbase.

Indian e-commerce market is expected to reach $120 billion by 2020, growing at an annual rate of 50% and globally, the B2B e-commerce almost doubling in size vis-à-vis the B2C e-commerce market and India is no exception to this. As the country is backed up by huge investments from global players, India is expected to be the next battle ground in the domain.

Profitability Not The Highest Priority, Says Flipkart CEO

Flipkart is still considered as one of the most successful startup to have ever come out of India. The homegrown ecommerce giant, which is currently the numero uno player in the Indian subcontinent, is in its tenth year of operation. The company, which momentarily lost its ground in the smartphone business has now bounced back quite well.

In an interview to live mint, Flipkart's chief executive officer, Kalyan Krishnamurthy, shared what went wrong in the smartphone segment when he came back in June 2016 and what he did to bring back the company back in the smartphone game.

According to Krishnamurthy, one of the main reasons that Flipkart failed in the category was because at that time there priorities were set somewhere else. But, from his first day back, he took a decision win back the category and started working towards it.

The CEO Flipkart also revealed that he had to work hard at rebuilding the relationships with smartphone brands who had flocked to its rival Amazon for more than six months. He said, "It was (partly) about rebuilding brand relationships. It was not that the relationships were bad but yeah we could have done better on that. Today it’s very different. (Today) we tell them that we don’t want to deal with you at a model level or just one product line level. We work with brands at the planning level. We go to them and say that what do you want to achieve here in the next 12-18 months. We want to achieve this so let’s plan together, this is what we can do for you. For instance, six launches, this is the kind of marketing we can do, this is the kind of PR (public relations)—so it’s a very holistic plan that we give. Rather than just saying that this launch is on my platform and this is the margin structure. How do you make brands successful over the long-term? That’s what we’ve done well."

Commenting on if he's concerned that a large chunk (about 60 per cent) of the firm's sales come from smartphones. Krishnamurthy answered that he's not concerned as that's what the customers are shopping nowadays. He added, if the country wants to buy mobile phones, they're going to work towards giving them that in the best possible way.

Considering a large part of the firm's sales come from smartphones, the issue of profitability might come up a lot of times. To this, Krishnamurthy replied that profitability isn't on the top of the priority list for the startup right now. He said, "We will again go into a very clear consumer market building mode and expanding the market. We want to bring as many people as possible into the e-commerce fold, as many categories on a regular basis and we will invest towards that. We are very comfortable on the burn that we have today. Burn is not a metric that anybody worries about any more. And with the fund raise, burn is almost irrelevant."

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