Flipkart to focus on scale, growth in near term, says Binny Bansal

BENGALURU: Even after its acquisition by Walmart, Flipkart will continue to be run by its board of directors, top executives at both companies said. On May 9, Walmart agreed to pay $16 billion for a 77% stake in Flipkart. The deal has been structured in a way so as to allow for a public listing of Flipkart in a few years’ time although most analysts have cast doubts about an IPO happening any time soon, given Flipkart’s large losses.

Flipkart co-founder and group CEO Binny Bansal, Walmart chief operating officer Judith McKenna, Walmart India head Krish Iyer and Walmart executive vice president Dirk Van den Berghe spoke to reporters at Walmart’s headquarters at Bentonville in the US state of Arkansas about the way ahead for Flipkart. Edited excerpts:

Binny, you had been running Flipkart for more than 10 years. You were your own boss. What will it be like to work for somone else after such a long time?

Bansal: Thankfully, nothing is changing on that front. Flipkart has been a boardrun company and with Walmart coming in as an investor the operating structure doesn’t change and Flipkart will still be a board-run company. Members of the board will change a little bit but I will continue to report to the board.

Judith, till when will Walmart have to keep funding Flipkart? When does it expect Flipkart to reach profitability?

McKenna: We recognise that this is not a short term investment, this is a longterm investment. We can’t disclose (our investments plans over the next five years).

Why are you looking to bring new investors on board at Flipkart?

McKenna: We see it as a way of increasing funding available to the business if that’s what we choose to do.

Bansal: We already have some financial investors like Tiger, Accel... Bringing new financial investors won’t change the shape of the board. It will help in making an IPO a reality.

What are the immediate synergies between Walmart and Flipkart?

Bansal: We’ll be looking at Indian sellers selling on different Walmart properties across the globe. Not just bringing stuff to India, but also taking stuff to the world.

Van den Berghe: That’s the biggest part of the synergies, the fact that it goes in two directions.

What are Flipkart’s plans for the grocery business?

Bansal: We started grocery in Bengaluru a few months back. Launching a category takes a lot of effort with building a supply chain, getting vendors on board... we started thinking about how we wanted to do grocery two years back.

It’s still an experiment but we’re really excited about the results. The plan is to launch it in another four cities over the next two or three quarters. What we’ve learnt is that every city is going to be very different. The next two years are going to be a learning period for us in grocery and then we will look to scale it after 2020.

What will be the focus for Flipkart: margins or growth?

Bansal: We’ve grown really fast but e-commerce is still only 2.5% of the whole retail market so there’s a lot of room to expand. E-commerce businesses become profitable at a much larger scale - we’ve seen that across the globe. So there’s a long way to go from a scale perspective.

Our view is that for the near-term future our focus is going to be on scale and growth. There was a clear meeting of the minds with Walmart that they want us to focus on expanding the market and getting more and more new customers to Flipkart.