Is Tiger Global tightening the reins on Flipkart?

Photo credit: Hobvias Sudoneighm.

At a time when Flipkart is looking over its shoulder at global rival Amazon catching up fast, Tiger Global MD Kalyan Krishnamurthy has taken over as head of categories for the Indian ecommerce leader. He will report to Flipkart co-founder and CEO Binny Bansal.

Kalyan continues as MD of Tiger Global Management, according to his LinkedIn profile.

There’s no word from either Flipkart or Tiger Global on the move, but it comes at a time when Flipkart finds itself caught between a rock and a hard place. It is desperately trying to cut costs following markdowns in valuation and difficulties in raising additional funds. At the same time, Amazon has pumped US$3 billion more into its India arm to go for the jugular.

For example, Flipkart is raising commissions by 5-6 percent for its merchants with effect from today. This hasn’t gone down well with sellers, naturally. But to make matters worse, Amazon reduced seller fees a couple of days ago.

See: Amazon is closing in on Flipkart. Jeff Bezos describes how he got there

Make-or-break time

Photo credit: Pixabay.

There are persistent rumors of Flipkart being under pressure from investors to tighten its business model. One of the areas of concern is its bloated workforce. It recently caught flak from India’s leading colleges for deferring joining dates of campus recruits on the plea of “restructuring” its business.

The arrival of Tiger Global’s Kalyan Krishnamurthy, seen in this context, portends a make-or-break time for Flipkart. Tiger Global is Flipkart’s main investor, participating in every round from its series B in 2010. It is also an investor in Amazon, but slashed its holding in the American behemoth by two-thirds last month. Now it will be looking to make its US$1 billion investment in Flipkart pay off.

What form that takes is unclear.

There have been unconfirmed reports of acquisition talks between Alibaba and Flipkart, as there seem to be no takers among VCs for another mega funding round. Whatever the course it takes, Flipkart will have to find a way to stop the slide in its valuation by cutting costs, boosting revenue, and also maintaining its leadership position. That’s a very tall order.

Indian ecommerce pioneer K Vaitheeswaran feels local players Flipkart and Snapdeal have already missed the boat. They went after the “easier goal” of chasing growth with discounts, instead of focusing on customer loyalty and building a sustainable business model. “Today they’re forced to come up with something better – and they’re fumbling,” he told Tech in Asia in an interview last week.

And here’s what he tweeted after reading this story.