Flipkart is going through changing times. Following the exit of Sachin Bansal post the Walmart-Flipkart deal, co-founder and the group CEO of Flipkart, Binny Bansal also resigned following an investigation by the company into alleged ’serious personal misconduct ‘. The statement didn’t give details of the allegations against Bansal, but the unceremonious exit has shocked everyone in the industry. The resignation of the Bansals mark the exit of co-founders from India’s largest online retailer. It now stands that both Sachin and Binny exited the company they founded more than a decade ago after its acquisition of Walmart, which was touted as the world’s biggest ecommerce deal that stood at over $16 billion.
Walmart in a statement said, “Binny Bansal announced his resignation as CEO of Flipkart Group, effective immediately. Binny has been an important part of Flipkart since co-founding the company, but recent events risked becoming a distraction and Binny has made a decision to step down”. However, the company did not further disclose the nature of allegations that were leveled against him.
Sources reveal that the complaint was filed earlier this year in July by one of the employees after which an enquiry was conducted by a law firm at the behest of the board of the company. Walmart said while the investigation “did not find evidence to corroborate the complainant’s assertions against Bansal, it did reveal other lapses in judgement, particularly a lack of transparency, related to how Binny responded to the situation. Because of this, we have accepted his decision to resign.”
Denying the allegations against him, Binny in an internal letter written to the staff was mentioned in BloombergQuint that he wanted to continue for a “few more quarters” after closing the Walmart deal, but the decision to step down was accelerated after the “personal events”.
“These have been challenging times for my family and me. I am concerned that this may become distraction for the company and the team. In the light of these circumstances, I feel it is best to step away as Chairman and Group CEO,” Bansal wrote.
But the business will continue to run as usual, according to the board, which added that Kalyan Krishnamurthy will continue as the CEO of Flipkart, which will now include Myntra and Jabong, Walmart said. Ananth Narayanan will continue as the CEO of Myntra and Jabong and will report to Krishnamurthy.
Meanwhile, Walmart latest decision to put Myntra and Jabong under Flipkart has created uncertainty about the direction for the latter, which had largely operated independently within the Flipkart Group since Myntra was acquired by the e-commerce firm in 2014.
At present, Walmart wants to keep Myntra as a brand but it is still evaluating possibilities of integrating some roles between Myntra and Flipkart’s fashion business and running the two more closely, a Livemint report said.
Terming the exit as ‘ unfortunate and challenging for Binny , his family and Flipkart’ , the board email led by the CEO said that there will not be changes to the existing structure. Krishnamurthy will continue to be the CEO of Flipkart, which will now include Myntra and Jabong, continuing to operate as separate platforms. Ananth Narayanan will continue as the CEO of Myntra and Jabong, while Sameer Nigam will continue as PhonePe’s CEO. He will now directly report to the board of the company.
In his email, he assured employees that it will be business-as-usual, going forward. “Flipkart’s leadership position today was possible due to years of hard work and collaboration between all stakeholders of the e-commerce ecosystem, particularly you, whose ingenuity and dedication have led us to become the market leader in India,” he said.
While the details of the nature of the allegations and investigation are likely to come out in the time to come, experts believe at a time when the company is fighting its biggest battle in the e-commerce space, the untimely exit of its founders was perhaps the least desired.
Indian e-commerce is projected to reach $200 billion by 2026 from $38.5 billion as of 2017, according to global financial services company Morgan Stanley, as smartphones become more affordable and mobile data becomes cheaper, making online shopping increasingly accessible. There is also an intense battle among etail giants such as Amazon, Walmart-Flipkart, Alibaba and several others in the online space. In such a scenario, time will tell how these entities can grab their biggest share of pie in the country’s ecommerce ecosystem.