Obituary … Flipkart 2008-Any Moment Now (Part 1)

Flipkart and other e-commerce companies in India are going to die a slow painful death if they continue on this path. They are spending excessively on unwanted things. By unwanted I mean labor, marketing expenses, logistics and other costs which could have been avoided.

When I read the headlines that Amazon is going to invest $3bn in India, that made me think how cockroach like Indian e-commerce companies like Flipkart are compared to Amazon. Flipkart says it delivers to about 8 million customers in a month. This is a good number considering India has only recently started to adopt the internet.

I mentioned unnecessary expenses which Flipkart or any e-commerce company in India has. Let me list a few:

Employee Number

Flipkart has about 33,000 employees. Google has 53,000 employees world over and Flipkart has 33,000 employees in India! I believe this is some trend among Indian companies to hire way more than what is actually needed.

Google is into some remarkable innovation. The most innovative thing Flipkart has done is create Flyte which was a music portal like iTunes which not surprisingly bombed. Otherwise, Flipkart isn’t doing anything innovative but mostly ctrl c + ctrl v of what Amazon is doing. They copied Amazon by focusing on books and promoted a lot of e-books at one point of time. They even copied Amazon’s premium delivery service and called Flipkart First (I think).

My point is, why do you want so many employees? When all they are doing is coding. The access to technology these days is incredibly high. It isn’t a big deal if you say you can make an app or create an online store. Hell, I almost created one on my website a few years ago using Woo Commerce. With 53,000 employees, Google has been able to conquer the world. With 33,000 employees, all Flipkart is doing is bleeding its cash reserves.

Employee Cost

The average software engineers in Flipkart get Rs. 100,000 per month. Here is the hilarious part, all they do is code.  They are not doing anything innovative. Zomato scanned restaurant menus and uploaded it on their website for over 7 years and then saw sales plummet or rather cash reserves deplete and this resulted in 250 employees receiving the pink slip in 2015. Paying people lakhs per month to scan restaurant menu cards? That is indeed innovative. An innovative way to burn money.

PayTM gave 200 of its 4500 employees a hike of 100% in 2016. These are things they can afford now but they cannot once their VC funding runs out or stops. $500 million in funding from Alibaba is best spent on employees who do coding and escape innovation.

The opposite is there in education, universities spend on acres of land building a basketball court or a swimming pool and hardly spend on training its teachers who are the real source of revenue for any educational institution. Ever noticed not a single university; Amity, Sharada, Lovely Professional or any other institution advertises about the quality of teachers they have?

It makes sense when you spend on your employees when they give good returns. Take for example, JK Shah Academy which is known for its excellence in coaching students who want to pursue Chartered Accountancy. Every student of JK Shah knows the quality of faculty there are the best and the only reason why so many students join there is for the quality of faculty. The academy rewards its teachers for this because they know very well that it is the teachers who are the real reason why admissions happen in the 1000s for every batch.  In short, it makes sense to pay your employees so much if they bring in a lot of revenue.

1 comment

  1. Anu

    Interesting article here but I didn’t read beyond the part where you started bellyaching about the ‘lack of faculty’ in a handful of private institutes. I am a student of Amity and I have absolutely no complaints about the faculty or the quality of teaching. As far as expenses for infrastructure is concerned, it is to give the students a better experience and exposure so as to develop their personalities as a whole. We are given unmatched international and industry exposure which only benefits us and that is the reason why our programs are considered as par as reputed universities in the country and abroad. Please do not make uninformed, stereotypical statements regarding things you have no idea about. what you mentioned here cannot be considered analogous to the scenario in flipkart. And as far as teachers are concerned, what do you think of the handful of ‘good’ teachers who chose to be associated with tutorial institutes and demand lakhs instead of slogging away in universities in colleges. Who’s really to blame here?

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