Flipkart’s other Bansal comes to the fore

Bengaluru/New Delhi: At an open house meeting in December, a Flipkart employee asked Binny Bansal, the company’s billionaire co-founder and chief operating officer, whether he was leaving. At the time, e-commerce circles were rife with rumours that Bansal was on his way out of Flipkart, along with one other senior executive (such rumours are commonplace in the start-up world).

With a dismissive laugh, Bansal answered the employee, “The only people who can ask me to leave are the board members and they seem to be pretty happy with me. I am not going anywhere.”

Given recent developments, Binny’s reply was an understatement.

On Monday, Flipkart named Binny as its new chief executive officer (CEO), replacing his long-time friend and business partner Sachin Bansal, who’s moved on to the role of executive chairman of the company.

The move, which was kept a secret even from many of the company’s senior employees, comes as a surprise especially since Flipkart undertook a massive management restructuring less than a year ago. Last February, Flipkart split into three units or businesses, giving Binny charge of its supply chain function. Sachin was to look at new initiatives, chiefly advertising, while its core business of online retail and marketplace would be run by Mukesh Bansal, Myntra’s co-founder who joined Flipkart in May 2014 when it bought the online fashion retailer.

That structure was changed on Monday. Flipkart’s backroom mastermind and its other Bansal, Binny, will now control all day-to-day responsibilities as CEO. The company said Sachin will now “provide strategic direction for Flipkart, mentor the senior leadership of the company and look for new investment opportunities.” Mukesh Bansal, who will report to Binny, continues to lead the commerce platform and will also oversee the company’s fledgling ads business.

Binny takes over at Flipkart when it is potentially facing its toughest test, even for a company that is all-too-familiar with volatility and adverse market conditions. Flipkart is engaged in a high-stake market share war with the local unit of Amazon.com Inc. and Snapdeal (run by Jasper Infotech Pvt. Ltd), the outcome of which will help shape the future of India’s entire start-up ecosystem.

If Flipkart can maintain its market leadership and stave off Amazon, for whom the Indian market is very important, it will be seen as a strong validation of local entrepreneurship. If Amazon, however, becomes No. 1 over the next two to three years, Flipkart’s lofty valuation (currently at $15 billion) may be eroded, destroying billions in investor wealth. The ripple effect will be disastrous for India’s start-ups.

Over the course of last year, Amazon gained market share in India, at the expense of both Flipkart and Snapdeal, India’s second largest e-commerce marketplace, according to publicly available data and several company executives. Exact market share figures aren’t available as Flipkart, Snapdeal and Amazon India are all private.

The logistics footprint of Amazon India grew three times to more than 2,100 cities and towns in 2015 as the online marketplace invested hundreds of crores of rupees to make its delivery service a key differentiator, Mint reported on 22 December. Since Amazon CEO Jeff Bezos promised in July 2014 to invest $2 billion in India over time, the company has pumped in more than $700 million into its operations here, regulatory filings show.

To be sure, Flipkart is still market leader by a long distance.

Yet, Amazon’s tech and logistics expertise as well as its deep pockets are formidable and the company is clearly catching up fast with local rivals.

Flipkart has tasked Binny with ensuring his old employer Amazon doesn’t upstage his start-up.