What's Flipkart's New Take On Evaluating Its Business Metrics
Unicorn's change in strategy could resonate across the industry?
Indian unicorn Flipkart CEO Binny Bansal laid out new evaluation models for measuring business valuations. In an interview with a leading business daily. Binny said the company is focussing on Net Promoter Score (NPS), which is based on customer loyalty – ditching a prior metric of considering Gross merchandise volume (GMV). “.So the focus is now on input targets. NPS is the most important metric for the company across all teams,” Binny told the business daily.
This change in evaluation process comes at a time when the Bengaluru-based unicorn has been bruised with several markdowns including that from Morgan Stanley.
Talking about the impact of markdowns, Binny called it a “theoretical exercise by small investors.” “From our perspective, valuation is when we raise money. When we raise money, our value will be clear in the market. Till we don't raise money, it is in the eye of the beholder,” Binny added. He said the company has enough money “for now.”
Other ecommerce chains to follow suit?
The ecommerce giant’s new approach comes when the industry is facing a lot of criticism around cash burn and poor unit economics. Industry experts have reiterated the fact that ecommerce firms should curb down their spending on unprecedented discounts and focus on keeping costs low. With Flipkart flagging out their new strategy, it could very well be a road map for other players in this field.
Since its inception, Flipkart has invested in a series of acquisitions, targeting different ambitions. The most talked about purchase being fashion retailer, Myntra in 2014.