Know how Flipkart is strengthening its position in the Indian e-commerce market

Flipkart, currently India’s largest eCommerce company, has been attracting the wrong kind of attention for a while now from central government authorities, given their complicated holding structure. Indian laws till now forbid foreign investment in eCommerce companies that sell directly to customers, as a result Flipkart has consciously graduated from the inventory model to marketplace model to earn overseas funding and strengthen its position in the market.

So, if you have been buying stuff from Flipkart believing there’s only one seller and there’s no possibility of a cheaper offer, it’s time to ponder over the fact. As reported by The Economic Times, Flipkart.com is seeking to distance itself from its largest supplier WS Retail and encourage other sellers to sell products directly through the site.

WS Retail accounting for more than 80% of the platform's total sales, currently acts as a sort of clearing house for most of the goods sold on Flipkart, sourcing bulk of the merchandise from vendors.

In the past few weeks, the site has directed several companies and brands, which sell on the site through WS Retail, to sell directly to consumers through its marketplace in the coming months.
Originally part owned by Flipkart founders, Sachin Bansal and Binny Bansal, WS Retail has undergone a change in ownership in 2012. This change in DNA of how Flipkart sells products online comes as a crucial step to encourage more foreign investment flow in the company.

While initial players in Indian eCommerce market had retailed directly to the customers, Amazon changed the game by bringing in the market place model. Following the same suit, Flipkart has changed their strategy.

"These guys have realised that they have to keep increasing the number of warehouses and team members to follow this model. Why take that headache?" the head of a fashion brand that currently sells its products through WS Retail has told the financial daily.

Several large vendors have said that Flipkart has asked them to switch their sales to the marketplace from its WS Retail inventory-led model. Flipkart is known to have informed the companies that they need not hold their inventories in its warehouses; rather the logistics operators will pick up merchandise from sellers to deliver to end-consumers.

As per the ET report, WS Retail's revenue more than doubled to Rs 3,135.3 crore in 2013-14 from the previous financial year.
However, WS Retail will continue to sell Flipkart exclusives such as Motorola and Xiaomi mobiles, but other brands will be made available through other sellers as well.

(Image: India Times)