When Flipkart is truly Walmart

Binny Bansal's exit from Flipkart may or may not have a deeper story but it definitely has thrown up questions and some answers too

Some called it a case of corporate rivalry, others a clean-up act by a multinational taking full control of the business, and then there were those who explained the “serious personal misconduct” as an episode of sexual assault in the season of #metoo. It’s another matter that this alleged harassment case did not break out on social media and it was reported to the company long before the Indian edition of #metoo went viral. Neither Flipkart, the Indian e-commerce poster boy founded by the two Bansals, nor its new owner American major Walmart elaborated on what the “serious personal misconduct” of co-founder Binny Bansal was. Without getting into details, Walmart pinned the blame on Binny’s “lack of transparency” and “lapses in judgement” in the matter. 

There may or may not be a deeper story behind the one that has been told to us, but the Walmart-Flipkart-Bansal tale has thrown up questions and maybe some answers too. 

First, to go back to the beginning of his latest stint, did Binny actually put more faith in Walmart, which in May had bought 77 per cent in Flipkart for $16 billion valuing the Bengaluru start-up at $21 billion, than in Sachin Bansal, with whom he had co-founded Flipkart in a Koramangala flat in 2007 and had attained a rock star status? When the world watched Sachin step down (perhaps under pressure from the new owners) six months ago, Binny stood beside the Walmart top executives as one team in a town hall celebration. This bonhomie was a contrast to the one Binny had shared with Sachin once upon a time. A rare terrace party in a Bengaluru restaurant sometime in early 2015 had captured the Sachin-Binny partnership well. Speaking to a group of journalists in an informal setting over pizza and cappuccino, Binny spoke only when Sachin asked him to chip in. There was no confusion on who the leader was. That changed soon enough when Binny was made the chief executive and Sachin executive chairman of Flipkart. 

Second, without getting into whether Binny’s exit was designed or if he deserved to go, the end of the Bansal saga at Flipkart is again leading us to the question — Why entrepreneurs in India are so short-lived as against the international role models like Jack Ma and Jeff Bezos? Is the funding model playing a spoil sport? If yes, what’s the way out? The “Start Up India, Stand Up India” projects, promoted by the government with much fanfare, have faded out without ever finding any place. On the other hand, marquee foreign investors are still betting big on Indian startups, from food delivery to cab aggregators. The fact that Kalyan Krishnamurthy, a former executive at Tiger Global, an early investor in Flipkart, is the man in charge at Flipkart (majority owned by Walmart) says it all.

The third question is what remains of Flipkart in Flipkart now, with the latest development. The founders are out though Binny retains his share as well as the board seat for now. Many of the e-commerce models started by the Bansals could be phased out, but the “billion day sales”, a Diwali regular, will remain and so will the ambitious campus in Embassy Tech Village to consolidate all of Flipkart’s offices. 

The fourth point is about what Binny’s exit actually means for Walmart — the biggest retailer in the world — waiting to make it big in the fastest growing market. If May 2018 was about a defining moment, when Walmart took 77 per cent in Flipkart; Binny’s exit opens up an opportunity for the Bentonville major to do things its own way in India without any Flipkart baggage. 

The fifth and the final question is: Is Praveen Khandelwal of the Confederation of All India Traders (CAIT) tracking the developments? If yes, does he have a view on Walmart-owned Flipkart without any of the founders running the show? CAIT, representing traders and a strong voter base for the ruling Bharatiya Janata Party (BJP), has always been up in arms against any talk of allowing foreign direct investment (FDI) in multi-brand retail. Walmart, in this case, is not into physical multi-brand retail, but is an investor in an e-commerce platform. But ahead of elections, these fine lines often get blurred.

Just before the 2014 Lok Sabha elections, Arun Jaitley, then campaigning in Amritsar, had said the BJP, if voted to power, would spread a red carpet for investors, instead of UPA regime’s red tape. However, on retail FDI, this government has been guided by vote-bank politics and there’s no time to change it at least till the 2019 elections.