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Last Updated : Nov 17, 2018 02:42 PM IST | Source:

After Binny Bansal's exit, Flipkart may lay off 50% of Jabong's workforce

Sources said that executives with designations of deputy general manager and above have been informed verbally about the decision

Priyanka Sahay @priyankasahay

Online fashion retailer Jabong, which was acquired by Myntra in a discount deal in 2016, is expected to lay off around 200-250 people, which is 40-50 percent of its total workforce, two sources told Moneycontrol.

The development comes just two days after the exit of Flipkart Group Chief Executive Officer Binny Bansal.

Flipkart owns three fashion brands under its umbrella -- Flipkart Fashion, Myntra and Jabong.


Executives with designations of deputy general manager and above have been informed verbally about the decision, said one of the sources mentioned above. The formal formal announcement will be made today.

The decision is learnt to have been taken following a lack of growth in Jabong's business during the last two quarters. It has been decided that the operations will now be consolidated in Bengaluru.

Myntra and Jabong together have been asked to move all operations to Bengaluru and cut workforce.

The employees who don't get the option to join in Bengaluru will be offered three months' pay as severance and 15 days of pay for every year served, besides gratuity.

As of now, there is no clarity on what happens to the Jabong brand after this consolidation exercise.

"They have done it before. It makes it easy to prepare the manager verbally before the actual thing starts. Everyone just wants to know what is going to happen to them," said one of the sources mentioned above.

"Many employees are willing to move to Bangalore for a bit if this is what it takes to save their jobs," another source said.

The conflict of interest arises from the fact that Flipkart already has its own fashion vertical -- Flipkart Fashion -- which is headed by Rishi Vasudev.

On the cost front, it wouldn't make sense for Walmart -- which acquired Flipkart earlier this year -- to keep pumping cash into three different brands.

However, no one was expecting the lay-offs to come so suddenly.

During last year's Big Billion Days, Flipkart Group claimed 80 percent market share in the online fashion segment with three brands -- Flipkart Fashion, Myntra and Jabong -- under its umbrella.

However, this year, while Flipkart Fashion claimed a market share of more than 50 percent on its own, Myntra and Jabong didn't participate in the Big Billion Days sale and held their own sales called Big Fashion Days.

On Thursday, Moneycontrol reported that after Bansal's exit, a rejig at Flipkart Group was imminent, because of which many senior leaders including Ananth Narayanan, CEO of Myntra and Jabong, could leave the company.

While Myntra and Flipkart didn't immediately respond to emails sent on the mass retrenchment development, in an email on Thursday a Flipkart spokesperson had said: "We are excited with the progress we are making at Myntra and Jabong and their business growth. The teams are well focused on bringing the best selection for consumers, and executing the existing strategy."

"As previously announced, Kalyan will continue to serve as CEO of Flipkart, while Ananth will continue providing great leadership as CEO of Myntra /Jabong. He will report into Kalyan and the companies will still operate as independent platforms under the Flipkart group."

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First Published on Nov 16, 2018 09:04 am
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