In his first few weeks at Flipkart, Kalyan was shocked to find out that the company was running its business without paying heed to contribution margins, a key metric for e-commerce companies. Starting with the implementation of a margin structure, Kalyan set about putting the finance function in order. Contracts with suppliers were renegotiated, better credit terms secured. A key project was devised to improve working capital. Within six months, the money Flipkart generated from operations was enough to fund its existing business. It was a major achievement – capital that was earlier being used to sustain the ongoing business was freed up for expansion. Consumed by its expansionary ambition, the company had been spending wantonly. Little effort had gone into making operations efficient. This was hurting Flipkart as it grew bigger. As an e-commerce company expands, its cost per unit is expected to reduce. In theory, as this cost reduces, the increase in sales is supposed to ensure that the company becomes profitable at a certain scale. At Flipkart, profitability was out of reach and would be for many years, but Kalyan ensured that at least its unit costs were kept under control.
He assembled a small group, comprised of relatively junior managers. Kalyan gave these managers complete freedom to accomplish the tasks assigned to them. They fit a uniform description: around thirty, hungry to prove their worth, enthusiastic about taking on extra work, spending day and night at their desks. And they were completely prepared to swear their loyalty to Kalyan.
Kalyan’s approach was straightforward, formulaic. He would tell his handpicked executives, ‘Mujhe itna growth chahiye – I want this much growth. Tell me what you need to get this done.’
One of Kalyan’s trusted understudies was Nitin Kochhar, who had overseen the working capital project. Nitin had moved to Flipkart from ITC in 2012. He noticed that Kalyan had an uncanny ability to spot mid-level managers who could ‘take the company to the next level’, and let them loose. Kalyan preferred not to interfere, spending only an hour or two a month checking in with his team. According to Nitin, ‘all he cared about was that targets were met’.
SACHIN HAD ALWAYS been the main man at Flipkart, with Binny close behind. But in 2013, as Sachin stepped back, it was Binny who took centre stage. When General Atlantic had pulled out of investing in Flipkart, Binny, too, had been rattled. But unlike Sachin, he recovered quickly.
Binny’s approach and priorities differed from Sachin’s. Sachin was instinctively drawn to the demand side of things. When he was in charge, Sachin had enjoyed being among the company’s engineers, tinkering with the website to give it a pleasing, smooth interface which was continuously improved by new features. When Binny ran Flipkart in 2013, it was the supply side of the company that prospered more, especially in the technology function. Binny directed his energies towards strengthening the company’s plumbing – the foundational structures that kept it all together. Taking Binny’s cue, the company’s leaders now adjusted their priorities. Amod Malviya, who had been made engineering head, had earlier worked mostly on the demand side. After his promotion, he became absorbed with building better technology for the supply chain function. Inventory planning, warehousing, pricing systems – these aspects improved significantly.
After the volatility of the previous year, Binny’s leadership brought stability and acted as a unifying, central force. According to Ankit Nagori, who worked closely with both Binny and Kalyan in 2013, Binny did a ‘great job’ in keeping the company together. ‘Binny would coordinate between the demand and supply teams and ensure everyone was on the same page.’ He directly oversaw the warehousing and logistics function in this period, taking decisions on the number and size of new warehouses, hiring blue-collar workers and improving the efficiency of the company’s warehousing processes.
In the second half of 2012, sales and customer service had suffered partly because the company had been overwhelmed by its headlong expansion into various businesses. At the end of the year, Binny reorganized the sales team, splitting it into three parts: books and general merchandise, electronics, and fashion. He shut down some categories like large electrical appliances, after acknowledging that the company had dived into them before being ready. The division of the sales team was one of the smartest moves Flipkart had made in months, as it brought back the focus and discipline that had vanished for the past half-year. It paid off almost instantly.
Under Ankit Nagori, the sales of fashion products began to briskly go up. Ankit had to prove himself all over again after the debacle of the previous year. By June 2013, the fashion category quadrupled – it had only taken six months. Flipkart promoted itself as an alternative to rivals like Myntra and Jabong by listing a vast merchandise of accessories such as belts, watches and sunglasses. It offered these products at deep discounts and used its excellent logistics network to deliver them quickly to customers. Ad campaigns promoting the fashion collection also served to accelerate the expansion in sales.
Nipun Mehra, a former Amazon executive and management consultant, was now given charge of the books and general merchandise section. In the early 2000s, he had ordered a T-shirt from a shopping website in India as a birthday gift for his brother. But the website delivered a beer mug instead. His mother was outraged – Nipun’s brother was yet to turn twenty. In 2011, Nipun had been working in the US with the Boston Consulting Group, a management consultancy. On a visit to India, Nipun heard about Flipkart from a colleague who was praising its service. So, when the company’s recruiters reached out to him for a job, he was intrigued. Having worked at Amazon’s Seattle headquarters for four years, he had wondered why a large e-commerce business hadn’t come up in India.
