"We have got our mojo back": Flipkart COO Nitin Seth on fixing mistakes, chasing growth and wooing back former 'Flipsters'

A job at Flipkart is like a roller-coaster ride, given the company’s blistering pace of growth. The experience of working at India’s largest e-tailer has helped former 'Flipsters', over 200 of them, become thick-skinned entrepreneurs. A company whose epitaph has been (unsuccessfully) written multiple times despite buying out rivals and securing large dollops of external funding, Flipkart, which leads LinkedIn's Top Companies List for the second consecutive year, is a true barometer of the Indian startup community. Some flawed moves – be it the experiment with app-only approach (for Myntra) or continued hyper-spending while customer complaints peaked – explain why Flipkart had several top management changes in the last two years. Employee morale suffered last year due to about 700 job cuts. In the last few quarters, Flipkart got its act together, reduced cash burn, tweaked the business model and re-invigorated its holiday sales efforts. Validation by Tencent and Microsoft, in the form of a record $1.4 billion funding cheque, has injected a new sense of optimism. Flipkart saw five-fold growth in transactions during its recently concluded Big 10 Sale, coinciding with its 10th anniversary. For Flipkart COO Nitin Seth, these are early days in enabling e-commerce for 1.3 billion Indians. In a free-wheeling chat, he gives a glimpse into Flipkart’s turnaround and highlights efforts taken to woo former staffers, while rubbishing claims of stagnant user growth. Edited excerpts.

LinkedIn: 2016 was a challenging year for Flipkart, one that fully stretched the company on some of its traditional strengths…

Nitin Seth: Indeed, last year was an interesting one for us.We had to take tough decisions, but it was also a year of strong turnaround, allowing us to consolidate our position as the leader of India’s e-commerce brigade. The Flipkart of 2017 is a more mature company. We did make a few mistakes two years back, the impact of which was visible in 2016. But we have learnt from it and have come back strongly. Importantly, we called out our problems in 2016, worked on it and the results are there for everyone to see.

Last year, the company had to lay off about 700-odd staffers. It also revoked offers made to a section of campus recruits. How did Flipkart keep employee morale high during periods of uncertainty?

Authentic and regular communication is paramount during times of crisis. In July-August, we went through a process of simplification and had to let go of staffers. I did 22 town halls with each of our groups to explain the "what and why" of it. We were extraordinarily honest and transparent with our employees. The authenticity of our communication ensured employees came on board. More specifically, we raised stock participation to unprecedented levels. Last year, we offered 35% of our eligible employees stock options as against 15% in the previous years. On the campus recruitment side, we did defer induction of some batches from top institutions, but ultimately we onboarded them all. From this group, about 85% of recruits eventually joined us, in line with the standard joining ratio for our industry. What you may not know is all deferred candidates were also offered internships at startups that we are affiliated with, so that they do not lose out on time.

Flipkart is known for its swanky offices

Some of the challenges facing the e-commerce industry – be it heightening competition, little or no customer stickiness and last mile delivery challenges – continue to be pain points. What makes you optimistic of Flipkart’s chances in 2017-18?

The mood in Flipkart is upbeat. I would say we have got the mojo back in the last three months or so. We are growing at a very fast rate, reduced cash burn, improved profitability and widened lead over competition by a very significant margin.

A growing belief is that there are only 10 million monthly active buyers of e-commerce in India. It shows the Indian market has not expanded despite the billions of dollars of investment. Why would you still maintain the bullishness?

That (10 million) is a very incorrect number. Flipkart has 100 million registered accounts. We have a significant percentage of unique customers who buy on the platform at least once a year. We define active customers as somebody who is a life customer and that’s a significant number. India’s e-commerce potential is recognised globally as one of the few $100-billion-plus growth opportunities. We can all have our points of view on the base numbers and how quickly that’s growing. There’s absolutely no doubt it’s a humongous opportunity. I wouldn’t question, even for a nanosecond, the size of the opportunity.

Considering the heightened focus on unit economics and sustainability, would it be fair to assume the company will break even in 2017-18?

I would not commit to that. The good news is we have made significant strides in improving our profitability and that will continue to be our focus.

Are there any concerted efforts to bring back employees that quit in the last couple of years?

Hiring ex-staffers is a focus area. Several Flipsters left us in the last few years to become entrepreneurs. Startups have a very high mortality rate, we would be happy if some of these folks come back to the fold. The good news is hiring is back to full swing in the last couple of quarters. We believe in the Middle India story and hence we are expanding the reach of Ekart (Flipkart’s logistics arm) significantly. That’s going to drive a lot of hiring. If I look at a mix of contractual and full-time staffers, 3,000 new hands could be added this year.

The recent $1.4 billion funding round, the largest ever in the Indian startup space, is a resounding validation of Flipkart and the potential of the Indian startup ecosystem. Nothing can be a bigger source of validation.

As COO, what are your main priorities this year?

As a company, there are three key focus areas. First is to grow the industry. Indian e-commerce has just moved from Stage 1, essentially metro customers shopping for mobiles and books, to the second stage where tier-2 and tier-3 locations will drive growth. In terms of categories, appliances and groceries will lead the momentum. Now that’s a tougher problem to solve. Second question is how we can build a sustainable business model. Look, e-commerce is a scale play that requires significant investments. E-commerce majors need cash – that’s not a great place to be in. The question is how we can build a sustainable, profitable business model and we are focused on it.

Photo Credits: Flipkart & Getty Images/Mint