The e-commerce scene in India is pretty much booming with a gazillion “Flipkart” clones and seemingly endless hordes of VC/PE money. But how much do these firms actually make, in terms of revenue? To answer this question, I’ve been wondering if its possible to estimate revenue for some of the more leading firms in the space. To do this, I chose Flipkart, mainly for its prominence and the fact that they recently announced a ballpark figure for their revenue.

In August, Flipkart digital VP Sameer Nigam indicated that, Flipkart crossed Rs 1 billion in revenue in July. This is Rs 100 crore in revenue for the month, or in USD terms is about USD 18 million (taking 1 USD = 55.1948 INR, average for the month).
Now popular site,, gives traffic estimates for popular web-sites on the net. The graph below shows traffic estimates for Flipkart.
Traffic to Flipkart
We see that Flipkart did approximately 33.11 million visitors in the month of July. Now most e-commerce sites have a 1-2% conversion rate (traffic to customers). Assuming a 1.5% conversion rate we get the estimate that Flipkart had 33.11 million X 1.5% = 0.5 million customers (approx), who bought something at the website.
So how much does the average customer at Flipkart spend ? According to the comScore- ASSOCHAM report on the State of E-Commerce in India (2012), this figure stands at $35 per transaction. This means that the estimate for Flipkart’s revenue in the month of July is approximately 0.5 million X $35 = 17.5 USD million
As we can see this is pretty close to reported revenues. Further, plotting revenue estimates by this method for the last 12 months, we get the following graph
Flipkart Revenue
It’s interesting to note that Flipkart’s revenues have been pretty much between USD 10 – 11 million per month between November 2011 and March 2012. After March 2012, there has been an steady and somewhat steep increase in revenue. This raises some interesting questions:
  • Is this an effect of Flyte being launched? Unlikely, since by FlipKart’s own assertion Flyte currently represents only 1% of overall sales. Also Flyte retails digital music at approximately Rs 10 per track (approx. 20 cents). Combining, these two figures it definitely seems highly unlikely that the increase is because of Flyte.
  • Is Flipkart’s foray into multiple categories finally paying off? Possibly. They definitely seem to have helped Flipkart raise the average transaction size to $35
  • Is this the effect of Flipkart’s recent media campaign? Considering that the new campaign launched around the same time that sales started picking up, this might be a possible cause. However, I would definitely need more data before judging on the causality and I guess there is only so much one can do with public sources.
Overall, this little thought experiment was definitely an interesting one and in the coming months I will try and see what else can be deduced by seemingly public sources of information.
  1. The traffic estimates website does not clearly indicate what the figures are. For the sake of convenience I assumed that the figures represent visits by potential buyers and not unique customers
  2. Biggest assumption – gives fairly OK estimates 🙂
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  1. amit says:

    Hey nice analysis by just collating the publicly available values of flipkart which I have not yet read anywhere else. Everybody just keeps saying Flipkart is the big thing or blah blah without doing much analysis as you have done . Any way to guess what is the bottomline ??that would be great .

  2. Karthik says:

    Pretty neat guesstimate I should say. Your logic for triangulating the revenue projections looks sound. So that answers the question of how much money FlipKart makes. I think, for a pure service business like FlipKart, revenue is not the correct metric for valuation, although it’s the first metric to consider. EBITDA or perhaps NOPAT would be the better estimate.
    Now that you’ve figured out the revenue (and the contributors to revenue), the next step would be to drill down to EBITDA.
    The trickiest part is the Gross Margin:
    This depends on
    1. The margins FlipKart has negotiated with the Vendors
    2. The cost for managing it’s workforce

    GM to EBITDA level is simpler:
    1. Infrastructure costs
    2. Sales Force Costs

    But I have no idea on what the assumptions can be. The other day we did discuss about the Cash on Delivery being a big wash for FlipKart. If you take that in, I’m not sure how much of $18 million is cash in the bank and not mere Cash on Delivery bookings.

    Great post! Definitely deserves a sequel.
    We still need to figure out how much “money” FlipKart makes.

  3. enygmatic says:

    Its not just margins, you would probably also need to consider the various investments Flipkart is making (last I heard they were gonna start their own payment gateway) to truly value Flipkart as a business. More to follow once I wrap my head around the numbers…