The Indian e-Commerce giant Flipkart has shocked the industry by making this announcement that it is preparing for a lay-off for its under-performing employees. Recently, the news of Flipkart owned Myntra acquiring jabong was viral and the deal was finalized for $70 million.
The lay-off news was announced on Friday morning but the number of employees was not mentioned. The Company’s statement mentioned that it is asking all the under-performers to resign from the company and quit but the total number of employees receiving the pink slip is not known. The sources reveal that the expected number may rise up to a total of 700-1000 people. It is well known that all the Indian e-commerce companies are facing a tough competition from domestic as well as the foreign companies, the main foreign competition being Amazon.com Inc.
It was only few days back that e-tailor Flipkart owned Myntra has announced acquiring e-store Jabong through its London-based owners Global Fashion Group (GFG) for $70 million (Rs. 471 crore). This step was taken to eliminate the competition from market and consolidate its position in the fashion and lifestyle segment that they both operate in.
The statement issued by the company says that, “Employees who do not meet the performance bar…are encouraged to seek opportunities outside the company where their skills can be utilized better. Also, this is a fairly common practice among all the internet firms.”
Myntra was also initially bought by Flipkart for about $300 million last year to deal in the fashion market as a strong competitor. Flipkart’s biggest local rivals are Snapdeal and Amazon.
Sachin Bansal, former CEO of Flipkart was replaced by Binny Bansal in January this year, to achieve the target of cost cutting. Until then, Binny Bansal was the Chief Operating Officer (COO) of the company. The cost cutting is done so that the company could focus on the market and fight with its competitors in a better position being backed by Japan’s Softbank.
The market is getting tougher with lots of new competition driving-in. The main strategy of Flipkart is to focus on smaller towns and districts to turn them to online shopping for the products that are not available with the local manufacturers and vendors.
This fierce fight between the giants and locals to win the heart of consumers through various options like discounts, etc. have lead these online sellers to mounting losses, including Snapdeal and Amazon. There are also reports that now the funds for operations are also not available so easily instead they are harder to fetch.
Online shopping is something which is a trend now-a-days and the market is very huge, but surely this lay-off would not be easy for Flipkart.
