 "At townhall, Sachin Bansal concedes that Flipkart missed targets")
In a townhall meeting on Friday, Flipkart co-founders Sachin and Binny Bansal (not related) revealed that the company had missed growth targets, while addressing employee concerns over layoffs. They even admitted that rival Amazon has stolen their customers, but downplayed the role of the US company for Flipkart's stalled growth.
"The market hasn't grown and that's way more concerning than how we are doing against Amazon," digital media company FactorDaily quoted chief executive Binny Bansal as telling employees. Flipkart declined to comment on Binny Bansal's statements made during the townhall.
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In March this year the government revised its guidelines for FDI in e-commerce marketplaces, mandating that firms such as Flipkart and Amazon do not influence the price of products sold on their platforms. This move is now seen as directly impacting sales on such platforms as customers are unwilling to pay higher prices for products sold online.
Flipkart's concerns come at a time, when the Bengaluru-headquartered company is struggling to attract new customers while rival Amazon is stealing its old ones forcing it to take drastic steps. Last month, the company laid-off close to 1,000 employees saying the move was part of its appraisal process, where employees who did not perform as required were asked to leave.
As Sachin Bansal revealed, this shape up or ship out philosophy wasn't just restricted to employees, but also to the top management including himself. Bansal, who stepped down as the chief executive of Flipkart in January this year, said that the move was "performance linked".
"Just look at who was (in the) management six months ago, one year ago, and who is (in the) management today. It's completely changed. Right ? Yeah, I mean, nobody is here. I have changed. I was the chief executive and I have changed. It was performance-linked," Sachin Bansal told employees during the townhall, according to FactorDaily.
The frankness of the co-founder might be a rare occasion, where top executives at large companies admit to their failures, but it's also for the first time that Flipkart is admitting to missing performance targets. Binny Bansal, who took over as chief executive of Flipkart has been putting together an entirely new management team, after several top-level exits seemingly due to their inability to hit targets.
In the past eight months Flipkart has seen the exits of Mukesh Bansal - considered as the right hand man of Sachin and Binny Bansal; Ankit Nagori - a long-time Flipster and chief business officer; Punit Soni - Flipkart's million-dollar hire from Silicon Valley, who headed product and strategy and Manish Maheshwari - head of seller business.
Their departures are indicative of two things, Flipkart is culling high-cost senior-level management in order to conserve what little cash it is left with and that no one at Flipkart is above being penalised for not hitting performance targets. Moreover, since it is time for Flipkart to become more focused in the fight against Amazon, many argue that there was no one better for that job than Binny Bansal - considered an operations genius, who built Flipkart's logistic arm eKart from scratch.
While Flipkart's growth has stalled over the past few quarters, Amazon has maintained a brisk pace of growth. According to research firm Redseer Consulting, in the quarter that ended March 31, Amazon overtook Snapdeal to become India's second largest e-commerce marketplace and closed the gap with Flipkart. Armed with a $5 billion war chest to win the Indian market by beating Flipkart, the last thing the Indian company needed was tougher market conditions supplied to it by changing government policies.