What on earth are they feeding the Bansals?

How can five unrelated Bansals control 85 percent of the e-commerce market in India? Read on to find out.
Written by Rajiv Rao, Contributing Writer

The Economic Times carries this remarkable factoid about the leading e-commerce companies in India. Namely, that the majority of them were all started by someone with the name of "Bansal".

Flipkart's Bansals

Leading the charge are the indomitable duo of Sachin Bansal (age 32) and Binny Bansal (age 31) — not related — who met each other while studying at one of the legendary Indian Institutes of Technology (this one in Delhi). They went on to found Flipkart, India's leading e-commerce player and the only thing that stands between Amazon and India domination. (Incidentally, both had previously worked at Amazon.)

Enter Rohit Bansal, who founded e-commerce company Snapdeal, whose turnover is about half of archrival Flipkart's. According to the article, both groups of Bansals grew up just four hours away from each other in the Indian state of Punjab.

Snapdeal's Rohit Bansal
Snapdeal's Rohit Bansal

Then there's the Myntra, specialising in apparel and potentially the third most important e-commerce company (and competitor to Flipkart) in India, founded by — no prizes for guessing — another Bansal. Mukesh, like the Flipkart founders, happened to also bag a coveted spot at the Indian Institute of Technology.

Also making the "Top 5 Bansals in e-commerce" list is Peyush Bansal (30), who founded leading online eyeglasses site LensKart.

All in all, according to the piece, the five unrelated Bansals and their four companies — Flipkart, Myntra, Snapdeal, and LensKart — control about 85 percent of India's entire e-tailing industry.

Naturally, the next question is, what on earth is going on here? Are the Bansals spiking their daal (lentils) and sabzi (veggies) with some sort of ancient Vedic brain food?

The Bansals are basically Banias; originally, traders of grain and spices who were also shopkeepers and moneylenders. In the Hindu hierarchy, they are part of the Vaishya caste, which ranks below Brahmins (formerly priests, who were propped up during the Colonial era and given administrative positions); and Kshatriyas, the warrior class.

Together, these three castes subjugated the dalits, or "untouchables", who performed menial work or jobs considered to be distasteful, like sweeping the streets or working with leather. For thousands of years, they were discriminated against — often violently so — and were chronically denied access to resources such as drinking water and schools in post-independence India.

Banias are typecast as being thrifty and shrewd businesspeople. The Agarwals are a sub-caste of the Banias, which is what the Bansals are.

It turns out that Agarwal businessmen, strewn across various parts of Northern and Western India, are amongst the most successful and wealthy to be found here, and include telecom giant Airtel's founder Sunil Mittal and steel magnate and head of ArcelorMittal, LN Mittal, amongst others.

So, what makes the Bansals tick? "In many families, we are used to having strategy for breakfast, accounts for lunch, and operations for dinner from an early age," said Chaitanya Aggarwal, 30, the founder and chief executive officer of Juvalia & You, an online shopping portal in another Economic Times article on the same topic.

Charan Singh, a professor at the Indian Institute of Management-Bangalore, said that the success of the Agarwal-Bansals has nothing to do with genes and is more a factor of social interactions. "It can be likened to the Jewish community in the US that continues to hold top posts in the US banking industry. The success ratio is a factor of social interactions, based upon which finances are raised or marketing is done. A couple of successes in a community have potential to change its paradigm."

Having access to a network funds and resources can make all the difference. This is something that many in India, like the lowest-caste dalits don't have, something that I wrote about here when looking into claims of a surge in dalit entrepreneurship.

The internet retail trade is not the easiest game to play in India, considering the many logistical headaches involved.

Therefore, coming from an environment where the basics of selling and buying were drilled into you at a very early age makes the Bansals a natural fit into the e-commerce space.

They will of course soon have to tangle with Jeff Bezos, a Princeton electrical engineering and computer science graduate who wired a lot of the New York investment banks with their tech needs.

That should be an interesting tussle to watch.

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