From job cuts to no-go projects, Walmart revamps Flipkart with eye on cost

Walmart is targeting to revamp Flipkart's functions by the third quarter of the next financial year, to be able to make a point to its shareholders

Cut costs, streamline manpower and bring down redundancies — that seems to be the new mantra for the country’s largest online marketplace Flipkart after the unceremonious exit of its co-founder Binny Bansal.

The company is planning to shed what it believes is excess manpower, sources close to the company said. Estimates indicate that Flipkart staff strength (including permanent and contractual) could be down by around 1,500 sometime next year as a result of a phased rationalisation move by American behemoth Walmart, the new owner of the Bengaluru-based e-commerce firm. Flipkart’s total staff strength is close to 50,000, of which around 12,000 are permanent employees.     

In a clear sign of a new era replacing the old at Flipkart, some of the pet projects of the ex-founders Sachin Bansal and Binny Bansal are being axed. While on a leaner path, some of the existing divisions at Flipkart could be shut down too. Firmly in the driver’s seat, Kalyan Krishnamurthy, the man from Tiger Global and now CEO of Flipkart, is spearheading these changes and more that Walmart wants to see in the organisation.  

Flipkart did not respond to queries on proposed downsizing.  

No-go projects

Sources said Sachin Bansal had plans to acqui-hire three new firms including a small events ticketing and bookings portal, a data analytics and sciences firm based out of San Francisco as well as a payments platform with expertise in providing offline payments solution. Those plans were dropped after the company was acquired by Walmart and Sachin Bansal exited the firm.

Similarly, Binny Bansal had been working on a project linked to backend logistics and data sciences. “The project was capital intensive and required a large team. It was helmed by Binny Bansal himself. With him gone, the company thought it was better to shelve it,” said a source. 

The company is keen to have centralised divisions for most of its verticals for a better control over quality and costs.

Cutting cost

Walmart, it is learnt, is targeting to revamp Flipkart’s functions by the third quarter of the next financial year, to be able to make a point to its shareholders.

While as many as 500 to 600 employees had to go due to the merger of Jabong and Myntra (two fashion oriented online companies acquired by Flipkart), more layoffs, going up to 1,500 at a group level, are likely as part of the rationalization process, sources said.  

“The process has been already started at Jabong, but would happen at group level as well. While hiring would continue, some of the verticals where the company believes there is duplication of work would be shutdown. In divisions such as logistics, there is an excess of manpower that would be reduced as well,” another source said.  

Other plans

Push to the grocery business is something that Walmart is determined about. Stepping up the number of repeat customers through the grocery channel is the exact brief given to the managers, it is learnt.

The idea behind these changes is also to tell investors and shareholders that Walmart is in a position to not just take on Amazon in India, but globally as well. To have an edge in grocery and fashion will be key towards that goal.  With Amazon on a stake buying spree in offline retail partners including Shoppers Stop,  More and possibly Future Group, the partner base left for Flipkart to tie up with is shrinking.

In the next five months, Flipkart plans to expand its grocery services pan India. While it would not be selling perishables such as fresh produce and meats, a cold chain supply chain would be in place by the end of next year.

“In grocery, we have seen spectacular adoption and are now focused on ramping it up in Hyderabad, Chennai, Pune, after Bengaluru. ….We remain highly committed to ramping up grocery, which we believe will be a sticky proposition for customers. With Walmart as a partner, we believe we can leverage specific learning in grocery and supply chain,” the company said in reply to a detailed questionnaire. 

The fashion troika

In the new dispensation, Myntra-Jabong CEO Ananth Narayanan would be responsible not only for these two companies, but the overall integration with Flipkart Fashion as well. Even here,  redundancies in the fashion vertical would be trimmed, people aware of the developments said.

While Flipkart Fashion, Myntra and Jabong would continue to be separate brands for now, Narayanan would oversee a single team. The overall integration would take another six to eight months.

“Our decision to combine these teams is the best way to ensure that both brands can achieve long-term growth and success. We will continue to invest in the Myntra and Jabong brands and in our people to help make this happen and grow the business rapidly,” the company said. The company was silent on the plans of integration with Flipkart Fashion.