Flipkart has been the poster boy for entrepreneurs, startups, funding and e-commerce companies in India and abroad. It has been able to increase its Gross Merchandise Value (GMV), its customers, its valuation, workforce, etc. to dizzying heights but it seems to be slowing down and is facing many problems on multiple fronts.
It has faced a drastic drop in its valuation. Morgan Stanley values the company at $6 billion, which is a drastic drop from the $15 billion that it was valued at. Morgan Stanley has devalued its own investment by 34%. It had earlier marked down the value of its investment in Flipkart by 27% in February and this is the second time it has reduced its valuation. Flipkart may face problems if it needs to raise any funds in future.
Flipkart has had a very high attrition rate this year. Major heads of departments have left the company even before completing 2 years at the company. Senior employees who have quit this year include the product head Puneet Soni (who was hired from Google), Chief Business Officer (CBO) Ankit Nagori, finance head Sanjay Baweja, senior Vice President (VP) for engineering Peeyush Ranjan, private label head Mausam Bhatt, and their head for legal affairs Rajinder Sharma.
Flipkart was forced to hire Kalyan Krishnamurthy from Venture Capital Fund Tiger Global. This seems to be in line with the VCs wish to strengthen its grip at Flipkart to improve profitability and control losses.
Amazon seems to be the biggest challenge that Flipkart is facing in the long run. Amazon has invested Rs 7,000 crores in its India unit in the last 12 months and has grown much faster than Flipkart. It has overtaken Flipkart in terms of revenue in the last fiscal.
When you have someone with deep pockets snapping at your heels, you can beat them if you have a committed team with a focus on executing a specific plan. The challenge here is that with a tough financial scenario and a shallow bench for talent, Flipkart may find it tough to win against Amazon and this is why we feel, this may be the beginning of the end for Flipkart.