flipkart – The Flip Side

Posted: February 10, 2012 in Flipkart, Funded Acquisitions
Tags: , , , , , ,

Online retail is catching up in India. With the recent entry of Amazon, the mercury is rising. In the wake of Amazon, India’s own Amazon – Flipkart.com has started consolidating. Its latest acquition is the faltering competitor, Letsbuy.com. Flipkart has ambitious plans of notching up its revenue to Rs 4500 crores by 2015. What are these ambitions based on? Customer service that has few parallels in the Indian context, Delivery management that may not be best of class, but is definitely more reliable that other online businesses.

The question is: Are downstream capabilities like strong delivery, good customer service, and therefore, greater customer confidence alone enough to drive revenue and growth? The obvious answer is: No. A strong business model is not enough. Customer confidence can flag easily. All you need are a few bad deliveries, a few bad reviews on the wrong independent platforms and a breakdown in the system that has thus far delivered good service with products.

It is the last issue that we will discuss – breakdown in the system.

With a string of acquisitions from Mime 360 in 2011, and Chakpak in the same year, to Letsbuy.com this year, Flipkart is expanding through the acquisition route. It is buying out competencies rather than build them internally. Good move. But this move is froth with certain dangers. Not all acquisitions include the human resources. Even if the human resources are a part of the package, this human quotient will move out shortly on account of the policies of the acquiring company and the discomfort of working for the acquirer, all behavioral aspects of M&A, well embedded in research findings. This exodus of human resources will implode within Flipkart as a recruitment event. So the Flipkart sourcing team must be geared to face the imminent heat. Also the sourcing team’s efforts must be augmented by strong employee centric HR policies, directed at retention of core Flipkart resources as well as resources of the acquisitions.

Delivery of Service, and Satisfaction that ensure customer confidence is only possible with a strong and flexible team. In this case, it is even more essential to maintain a strong and flexible core Flipkart team. By core Flipkart team, I am not referring to the management team, but to every member on Flipkart payroll who has contributed to the company’s current status. Loyalty will play an important role in Flipkart’s efforts to sustain its growth. This includes customer loyalty as well as employee loyalty. Apart from loyalty, mentoring competent employees who know their stuff and can be trained to take on more responsibilities, is critical.

Why are we discussing all these? Obviously Flipkart must have all this, without which it wouldn’t be doing so well! Wrong! There are many issues that are ailing this growing giant! Anybody with their proverbial ear to the proverbial ground would realise that “all is not well”. This is an inside report on Flipkart’s health.

The core Flipkart team is unstable. The management is only stable down to the top four levels. Even Vice President level is unstable, with at least one vice president quitting within 8 months of joining. Managers and the File and Rank of Flipkart are dropping in and out of Flipkart. Word gets out with every leaving employee that the experience is not quite great, at least not as good as it looks in all the videos you can find on Youtube.

The privileges displayed in the videos is confined to a few – The Technology Team. This is the discriminatory attitude within Flipkart which is killing morale – The great Tech Non-tech divide. The techies work 5 days, with flexible timings, frequent breaks under pretense of hack days which never result in anything constructive, long lead times in resolving issues, and other privileges like foosball and frequent team outings. For the Non-techies – 6 day weeks, 12-hour days, no outings or team lunches/dinners unless your manager is a good one and doesn’t mind spending from his/her pocket, no games whatsoever and the worst part victims of misinformation and the blame game, techies NEVER, get the blame even if the crisis is due to their inefficiencies and incompetence. In other words, the Non-tech teams are the Underdogs in Flipkart. The result – Experienced employees with a year or more in Flipkart are leaving the company. Even the tech team members do not last long in spite of the privileges. Why? No idea! I do not have a source in that team. I would be glad to know and tell, though.

The result of this attrition – Flipkart’s catalogue launches are delayed by about 5-6 months. I am told by reliable sources that what they had planned for September-October 2011 has still not been launched. Critical product lines in Health care, Computer peripherals, software and other verticals are included in these delayed launches. These delayed launches have not even reached the runway. The catalogues are getting stale in the system storage. [The management is augmenting this backlog by launching other categories like Stationery. They are now selling premium branded pens (BUT not refills, mind you!).]

This will be the biggest challenge to Flipkart – Employee Morale, loyalty and experienced hands to maintain a clean deck!! Maintaining an experienced and loyal workforce that can weather the pressures of M&A, keep the catalog launches on track and clean up existing catalogs (Oh! you can still find incorrect, stale information there. I am told that they even have a team to QC the catalog, but apparently work is slow!), and maintain the standards of Delivery and Customer Satisfaction should be the order of things for Flipkart. Hear Ye, Bansals!!

Incidentally certain experts are of the opinion that the Funding guys, Tiger Global and Accel Partners drove the Letsbuy acquisition, probably against the wishes of the founders, the Bansals. But then that will be our next topic!


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