By Elton Gomes
Ananth Narayanan will continue in his position as Myntra CEO, dismissing all statements about him quitting the Flipkart group. This comes after some reports, on Thursday, indicated that Narayanan was likely to step down.
“I’m very excited about Myntra,” Narayanan told Reuters in an interview. “I certainly intend to continue.”
Earlier in the week, Walmart Inc, which owns Flipkart and Myntra, had said that Narayanan would now be reporting to Flipkart chief executive Kalyan Krishnamurthy following the resignation of CEO Binny Bansal. This meant that Krishnamurthy would be in charge of Myntra and Jabong.
Recent reports on Friday stated that Myntra will be integrating all of Jabong’s functions into the company. “Since Myntra’s purchase of Jabong in mid-2016, the two brands have been steadily integrating key business functions and streamlining processes. This has resulted in revenue growth and a significant improvement in the customer experience.
As the next step in this process, Myntra and Jabong will now fully integrate all the remaining functions including technology, marketing, category, revenue, finance, and creative teams,” the company said in a statement, the Economic Times reported.
The statement further said that Narayanan will continue to lead the team, and that Myntra’s independence as a business will be “preserved”. The Jabong brand will also be retained.
Earlier, reports on Thursday indicated that Narayanan would be on his way out due to differences with Krishnamurthy.
Under the new company structure, Krishnamurthy is the new overall boss of all companies under the Flipkart group, and CEOs from Myntra, Jabong, and PhonePe will report to him.
Reports mentioned that Narayanan was close to Binny Bansal. In the absence of Bansal, things would not be the same with Krishnamurthy heading the Flipkart group.
Some reports also suggested that Krishnamurthy and Narayanan don’t see “eye to eye” on several issues, including Krishnamurthy’s push to integrate Myntra and Jabong with Flipkart’s fashion vertical, Flipkart Fashion.
Flipkart Fashion vs Myntra
A potential conflict of interest arises due to fact that Flipkart already has its own fashion vertical: Flipkart Fashion, which is headed by Rishi Vasudev.
“If Ananth has to report Kalyan, he will also not stay for long because Kalyan already has Rishi Vasudev who manages fashion,” a source told MoneyControl.
Differences between Flipkart Fashion and Myntra have been known to exist since a long time because of preferential treatment given to one and not the other.
Moreover, Myntra and Jabong’s refusal to participate in Flipkart’s Big Billion Days sale could be an indicator of a rift.
During last year’s Big Billion Days, with the support of three fashion brands — Flipkart Fashion, Myntra, and Jabong, the Flipkart Group claimed 80 percent market share in the online fashion segment.
However, this year, Myntra and Jabong didn’t participate in the Big Billion Days sale and held their own sales called Big Fashion Days, while Flipkart Fashion claimed a market share of more than 50 percent on its own.
Job cuts expected in Jabong
Narayanan has confirmed that Jabong will be cutting jobs as the firm continues to integrate functions with Myntra, a process that kickstarted last year. Back-end roles are likely to be affected.
Myntra and Jabong will be functioning as one business unit helmed by Narayanan, but they will have separate staff, websites, and mobile apps.
“We are integrating some of the customer facing or the other functions as well which are around category, revenue, marketing etc,” Narayanan said, Reuters reported. Without giving specific numbers, he further said that less than 10 percent of Myntra-Jabong’s workforce will lose jobs.
Three sources familiar with the developments told Reuters that Jabong could cut nearly 200 jobs.
Binny Bansal resigns amidst probe
The rejig in Flipkart’s structure comes amidst the resignation of co-founder and group chief executive Binny Bansal. Bansal stepped down abruptly on Tuesday, following an internal investigation into an allegation of “serious personal misconduct”.
Walmart-owned Flipkart did not specify the allegation, but one person who was aware of the matter said it was related to an alleged sexual harassment by Bansal in 2016.
The investigation did not find any evidence to support the allegation that was made by the complainant. But it showed “lapses in judgement” on Binny Bansal’s part, Walmart noted. The US retail giant said that the episode revealed “particularly a lack of transparency, related to how Binny responded to the situation”.
The development certainly came as a setback to Walmart, who viewed Flipkart as a strong competitor against Amazon. Earlier in 2018, Walmart paid a whopping $16 billion in cash for a 77% stake in Flipkart, thus valuing India’s pioneering e-commerce retailer at more than $20 billion.
Walmart looking to restructure Flipkart after Binny Bansal’s exit
Walmart is disappointed with the circumstances that led to the exit of Binny Bansal. Since Bansal’s exit, Walmart has made some changes to Flipkart’s reporting structure, a top company executive said in a post-earnings conference call, the Economic Times reported.
After Binny Bansal’s exit, Walmart decided to bring Myntra and Jabong under the domain of Flipkart’s current CEO Kalyan Krishnamurthy. Krishnamurthy along with Sameer Nigam, who heads the payments arm PhonePe, will continue reporting directly to Flipkarts’s board.
Flipkart Fashion and Myntra will continue to be run independently. However, it remains unclear as to how much focus will remain on Jabong and whether it will continue operations. Keeping the restructuring in mind, Walmart seems optimistic about Flipkart and its presence in India.
“We still really love the business. We’re going to continue to push forward, but we felt it was appropriate to make the changes we did” said Dan Binder, vice president, investor relations, at Walmart, as per the Economic Times report.
Elton Gomes is a staff writer at Qrius
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