New Delhi/Bangalore: It was the flip no one saw coming.
On Monday, India’s largest e-commerce platform Flipkart.com named co-founder Binny Bansal as its new chief executive officer (CEO), replacing Sachin Bansal, in a move that it claimed would strengthen its management bandwidth as it seeks to combat arch rival Amazon India and kick off preparations for an expected initial public offering (IPO) over the next few years.
Flipkart said on Monday that co-founder and current CEO Sachin Bansal will now become executive chairman with immediate effect. Mukesh Bansal will continue to be head of the commerce platform at Flipkart and will now additionally run Flipkart’s advertising business, which was previously overseen by Sachin Bansal. He will report to Binny Bansal.
Employees of all corporate divisions including human resources, finance, legal, corporate communications and corporate development will also report to Binny Bansal, who was chief operating officer.
“…We want to prove that India can produce a world class internet company that can outshine and outclass any global behemoth. We also want to play a pivotal role in shaping the Internet and the commerce ecosystem of India,” said Sachin Bansal in an email sent to employees. “In the next phase of the journey, it will be our endeavour to fulfil this responsibility to India by delivering world class customer experience, driving innovations in mobile commerce and bringing in disruptive technologies.”
Mukesh Bansal will continue to be chairman of Myntra; Myntra’s chief executive officer Ananth Narayanan will also report to Binny Bansal.
The changes took almost everyone within and without the company by surprise. While there was a lot of speculation on the motivation, Mint couldn’t independently ascertain the reasons that prompted the company’s board to effect the changes. However, it does look as if the decision was made over the weekend.
Sachin Bansal’s new role will be more strategic, a person familiar with the matter said, asking not to be identified.
“In my role as executive chairman of Flipkart, I will play an active role in championing the Indian e-commerce sector and building the Indian ecosystem, and actively represent the company in external forums. I will be actively interacting with investors, partners and stakeholders, while helping to build India’s Internet and commerce ecosystem. It will be my objective to dramatically step up Flipkart’s leadership role among key external stakeholders. I will continue to provide strategic direction for Flipkart, mentor the senior leadership of the company and look for new investment opportunities,” Sachin Bansal said in an internal email.
Mint has a copy of the email.
“Sachin will now focus on fund raising and preparing Flipkart for an IPO. He will also look at doing strategic acquisitions, even large ones. The (reshuffle) had to happen,” the person cited above said. “Preparing the company for IPO is a very time consuming process and at the same time you can’t take your eye off the ball with Amazon snapping at your heels. This way, Binny can solely focus on running the company while Sachin can handle the strategic part and do deals.”
Binny Bansal expressed confidence that Flipkart will continue to be the dominant e-commerce firm in India.
“Today, we are in a very strong leadership position with over 60% market share of the m-commerce market, 50 million customers and clear leadership in smartphones and fashion. The journey ahead is equally exciting and challenging. Flipkart has all the necessary ingredients of brilliant talent and great technology to win this next phase as well,” said Binny Bansal.
Apart from holding off Amazon, Flipkart, valued at $15 billion, is also expected to go public over the next few years.
Flipkart underwent a major reorganization last year when it split the company into three units.
Last February, Flipkart gave Binny Bansal charge of its supply chain function while Sachin Bansal would look at new initiatives, chiefly advertising. The company’s core business of online retail and marketplace would be run by Mukesh Bansal, the Myntra co-founder who joined Flipkart in May 2014 when it bought the online fashion retailer.
While the move came as a surprise to several in the e-commerce industry, Abhishek Goyal, co-founder of Tracxn, a data analytics firm and an early investor in Flipkart, believes it is a well-thought-through decision.
“This is like the AWS (Amazon Web Services) moment when everyone remained sceptical about Jeff Bezos’s decision until they realized what a game changer it was,” Goyal said. AWS is the cloud services unit of Amazon.
Flipkart has raised more than $2.5 billion over the past 19 months and is currently valued at roughly $15 billion.
In December, Tiger Global Management, which is the largest investor in Flipkart, increased its stake in Amazon.com by buying 2.44 million shares of the Nasdaq-listed firm in a move widely seen as a hedge.