Flipkart targeting profitability in 2017 with the current cost-cutting & savings spree?

Editor | Sep 15, 2020

Leading online marketplace Flipkart is taking some measured steps towards a better performance. The company is serious about its growth tempo and is undertaking several measures to ensure it retains its spot.

Among the things Flipkart is doing is curbing its expenditure. It is trying to reduce its burn rate (the amount spent to beat rivals, through expenses like discounts). It wants to save roughly $150 to $200 million to woo investors.

The company was looking at a possible tie-up with Walmart where the latter was to invest significantly in the Indian company. However, this deal has reportedly fallen through.

The company has also reportedly reduced the space it originally planned to occupy. The company had plans to occupy 2 million square feet worth office space in Embassy Tech Village in Bangalore. However, now it plans to rent only 1.2 million square feet.

This was confirmed by an inside source,

“Flipkart in a recent meeting with top executives of Embassy Group has communicated they do not want to go ahead with the entire 2 million sq ft. The meeting was attended by Flipkart cofounder and CEO Binny Bansal and CFO Sanjay Baweja, who recently quit the firm.”

A penny saved is a penny earned

This seems to be the company’s refrain, as it has worked to keep its fit out costs (the expense involved in setting up an office space in a building) low.

“The company has reduced the fit out cost to Rs 1,500 per sq ft from Rs 2,400 per sq ft,” said an anonymous source.

The company currently has offices across Bangalore, but plans to consolidate its employees in one location.

Growth to be main concern

A person familiar with the happenings at Flipkart said on condition of anonymity,

“The focus is back on growth for which savings from cost cutting will be deployed.”

The company has plans to open a private furniture label towards this end.

Flipkart is also looking at promoting employees to higher posts rather than hire from outside. Says Nitin Seth, the company’s chief administration officer,

“If you always bring senior talent from outside, you cannot hold the culture; so, we have put the focus on internal talent development. Earlier, we would have probably gone to the market; instead, we have chosen to promote young talent and they’re doing exceptionally well.”

In the recent festive sale, Flipkart raced ahead of Amazon in terms of number of units sold, and GMV. However, a recent Trust Research Advisory (TRA) study notes that Amazon beats Flipkart, Snapdeal and Google to be the most attractive brand in India. Flipkart surely has a lot of work to do.

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Editor team is specialized in introducing the marketplace content targeting the Indian online sellers. They plan and coordinate to bring the appealing content for the small businesses on how to partner with the e-commerce sites like Amazon and Flipkart and strategies for improving their online business. 

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