Flipkart has a new CEO! Who replaced Binny Bansal and why?

A lot has been said and written about the country's biggest startup and pioneering e-commerce store, Flipkart. As the war against Amazon and struggle to cut down on losses continues, Flipkart has been going through some major management rejig. 

Now, former Tiger Global Management executive Kalyan Krishnamurthy has been elevated to the position of CEO at Flipkart. He will be replacing Binny Bansal, who in turn has been named as the group chief executive. Sachin Bansal, who was replaced by Binny last year, will continue as the Chairman.

The new structure would put Binny Bansal to oversee capital allocation, merger and acquisition related functions. Krishnamurthy who will now look at profit and loss, will be reporting to Binny. Nitin Seth, the current chief administrative office will now become the chief operating officer and will report to Krishnamurthy. Meanwhile, Anant Narayanan will continue as the CEO of Myntra-Jabong while Sameer Nigam as the CEO of PhonePe. 

Why the reshuffle doesn't come as a surprise

All through last year, Flipkart has been grappling with issues, be it the valuation markdown, keeping up with Amazon or trying to make profits. Amid these issues, came the handful of exits at top management and the failed strategy of going app-only. We saw Manish Maheshwari exit to join Network 18, while Punit Soni, the Chief Product Officer, who had quit Motorola to join Flipkart also decided to part ways.

The company had been hitting headlines for all wrong reasons and one such was the failed app-only strategy. After being in denial for some time, the company probably finally realised that its best to abandon the app-only plans, with significant number of users coming from desktop. It reopened a mobile site for Myntra, and finally launched the Flipkart Lite website that could offer better access at areas with low bandwidth.

Last year, Flipkart lost its top position to arch-rival Amazon. And, to make matters worse it faced multiple markdowns. By November 2016, Flipkart saw almost four markdowns in 9 months. The last we saw Morgan Stanley slash Flipkart value by 38% to $5.58 billion. It had once enjoyed a valuation of $15 billion. A recent report highlights that in order to stay ahead in the race, Flipkart ran losses of about Rs 14 crore daily. He spent aggressively to acquire talent.

"The higher cost of retaining talent — including salaries and stock-based compensation that shot up by 124 per cent to Rs 1,880 crore — as well as business promotion expenses that doubled to about Rs1,100 crore, drove a large part of the losses," points out ET report. Meanwhile, another report points out that Flipkart's logistics arm Ekart suffers massive Rs 810-crore loss.

Flipkart also made some 'performance-based' layoffs last year while Sachin Bansal stepped down as the CEO. Now, Binny Bansal being replaced by Krishnamurthy isn't surprising either. This Livemint report, citing Flipkart executive, claims that 'Kalyan was anyway running the show'. The report also adds that its largest investor Tiger Global and Lee Fixel 'are in the driver's seat'. Krishnamurthy's has been instrumental at implementing the winning Big Billion days Sale, and his appointment comes just when Flipkart is looking for a fresh round of funding. 

• Flipkart
• Kalyan Krishnamurthy
• Binny Bansal