Home / Companies / News /  Flipkart reorganizes into three units

Bengaluru: Flipkart Ltd has reorganized the company into three units as India’s largest e-commerce firm seeks to venture into new businesses, and sharpen its focus on improving its technology and expanding its supply chain.

The reorganization, Flipkart’s biggest in its seven-and-a-half-year history, will result in co-founder and chief executive officer Sachin Bansal taking up a new role, three people familiar with the matter said. Bansal, who will remain CEO, is increasing focus on strategy and new projects, and he will gradually reduce his involvement in day-to-day management, the people said.

Flipkart will now have three units or businesses—new initiatives, to be headed by CEO Bansal; supply chain, which will be led by co-founder and chief operating officer (COO) Binny Bansal; and marketplace, retail and marketing, which will be headed by Mukesh Bansal, the Myntra co-founder who joined Flipkart last May when it bought the online fashion retailer.

The company is also splitting its technology function into engineering—day-to-day technology management—and research and development or innovation. Senior vice-president Sameer Nigam will head engineering while Amod Malviya, chief technology officer, will focus more on new technology projects and innovation, the three people cited above said. Nigam will report to Mukesh Bansal, the people said, requesting anonymity.

The move to split Flipkart into three business units was finalized at the company’s board meeting earlier this week.

“Part of the reason behind this reorganization is for Sachin and Binny to focus more on the long-term path for Flipkart. So Sachin, for instance, is going to be looking at mobile payments, generating advertising revenues and exploring other new projects. Mukesh’s role had clearly expanded over the past few months; they’ve just formalized it now," one of the people cited above said.

“As a growing business we are constantly reorganising our teams to match the changing environment," a Flipkart spokesperson said by email. “Realigning roles and responsibilities help us keep pace with our aggressive growth and the dynamic environment we operate in. We have done many such changes in the past and will continue to do the same in the future whenever the needs arise."

The company is hiring top executives in its supply chain and marketing functions, the three people cited above said.

“The plan is to build a massive supply chain and logistics organization. They are looking for senior supply chain leaders because supply chain is key for them if they have to maintain their lead over Snapdeal and Amazon," the first person cited above said.

On logistics and sourcing, Flipkart works closely with WS Retail Services Pvt. Ltd, a seller on Flipkart. WS Retail was earlier owned by the Flipkart co-founders but they were forced to sell a large stake to former OnMobile Global Ltd chief operating officer Rajiv Kuchhal in September 2012 for fear of violating India’ foreign direct investment (FDI) rules.

Now, apart from Kuchhal, two former Flipkart employees, Tapas Rudrapatna and Sujeet Kumar, control a large part of WS Retail, which generates a large part of Flipkart’s sales. Rudrapatna and Kumar are said to be close to the Bansals.

Because of this arrangement, Flipkart is considered to be a combination of an online marketplace and a direct online retailer.

Flipkart has now identified increasing its marketplace business and adding tens of thousands of sellers as one of its key priorities this year to boost revenue growth and improve margins, said all the three people. Flipkart senior vice-president Ankit Nagori, who heads the marketplace function, will now report to Mukesh Bansal under the new structure.

Flipkart is among the world’s most sought-after private companies, with its valuation jumping to $11-$12 billion at the end of December from $2.5 billion a year ago. It raised nearly $2 billion in capital in 2014 from large institutional investors such as Government of Singapore Investment Corporation and Qatar Investment Authority, as well as venture capital firms including Tiger Global Management, its largest shareholder.

However, the jump in valuation significantly increases pressure on the company to keep delivering high revenue growth and keep well-funded rivals Amazon India and Snapdeal at bay. To help achieve that, Flipkart is spending big money on building a strong leadership team by recruiting senior management executives from bigger, more established companies ahead of a possible initial public offering in two years.

Flipkart’s reorganization move follows the departure of several senior executives last year.

The company saw its biggest management churn in 18 months late last year with as many as five senior executives leaving since September, Mint reported on 19 November.

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