Flipkart is looking to reduce its real estate costs by negotiating to reduce the office space it agreed to take up from two million square feet to just 900,000 square feet, which is less than half of the original amount. This signals that Flipkart will not hire as many employees as originally planned and shows the tough times e-commerce companies are facing against competitors like Amazon. Flipkart is also taking steps like merging departments, limiting hiring, centralizing purchases, offering employees the option to resign, and reducing discounts and return windows to cut costs.

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Flipkart Finds Frugal Ways To Save Costs
As Flipkart struggles to cut down cost after a series of management reshuffle,
the e-commerce firm is looking at reducing its real estate spending, signaling
tough times ahead for the poster boy of Indian startups.
#DigitalErra Thought Corner
The company, which in 2015 had agreed to take up two million sq-ft of office
space, is negotiating to reduce it to just 900,000 sq-ft. That’s less than half, in
just two years. While the real estate deal does not tell much about the health of
Flipkart in particular but it does say that Flipkart won’t hire as many as it had
planned to, earlier. Add to that, the cost it saves around Rs 50 per sq-ft maybe
that it will need to fund it discount was against global heavyweight Amazon.

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Last year, Snapdeal also consolidated several of its offices in the National
Capital Region into one central office spread over 4.5 lakh sq ft in the Udyog
Vihar area of Gurgaon.
In less than two years, Flipkart’s market value is slashed to a third from its
peak of $15 billion, marked down by its own investors. The rise of Amazon, to
become a close second has only made things worse for the Indian grown
startup. Increasing the ante, there are talks of Alibaba entering the Indian e-
commerce market along with Paytm.
Steps taken by Flipkart to reduce costs
Unlike other etailers, Flipkart took some smart and aggressive steps to cut
down on cash burn and improve Net Promoter Score (NPS).
 Last year, Flipkart took the decision to merge departments, keeping
hiring to minimum and centralizing purchases to save costs by as much
as 30%. Flipkart is offering employees who have failed to meet
professional expectations the choice to either resign or be sent off with
severance pay; a decision that is likely to impact around 700-1000
employees and is seen as reflective of the challenging times that
currently exist in the online retail industry, which is attempting to find
a balance between saving costs and chasing a high rate of growth. It
has begun curbing discounts, capping salary increments and reducing
its monthly burn rate from in the first half of 2016 to $40 million in the
latter half of the year.
 The market leader has revised its return policy from a 30-day window
to just 10 days for top-selling products. The 30-day return policy had
led to a logistical nightmare and additional operational expenses for
this marketplace’s sellers, who had to pay for the returned shipment
from their own pockets.
 Flipkart, taking a leaf out of American e-commerce startup Jet.com’s
book to save on delivery charges, plans to offer discounts by

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encouraging consumers to pick up multiple items that can be shipped
in one box.
 Flipkart CEO Kalyan Krishnamurthy has ordered a freeze on some of
the firm’s moon-shot projects and is not allocating any fresh budgets
towards its F7 Labs in Silicon Valley, the people said. Flipkart’s logistics
unit Ekart has also shut its customer-to-customer service and hyper-
local delivery offering.
Gaining steam
Under Krishnamurthy, Flipkart is already showing signs of sustaining its
turnaround. The company pulled in gross sales of more than Rs2,600 crore in
both December and January. Amazon, on the other hand, generated gross sales
of roughly Rs2,300 crore, on average, in these months. If sales at Flipkart’s
fashion units Myntra and Jabong are included, the company is much ahead of
Amazon.
Conclusion
There are a number of ways of reducing costs all the way down the process of
your e-commerce business. Supply and shipping solutions need to be compared
and weighed according to your business strategy. With care, there are many
profitable opportunities still waiting to be found.