Tuesday, 7 August 2018

WS Retail will not sell on Flipkart

WS Retail, a wholly owned subsidiary of Flipkart Online Services, will not sell any product on Flipkart now.

To avoid breaking FDI laws of India, Flipkart had created WS Retail, and positioned them as one of the sellers in their marketplace.

Since 2015, when Flipkart
bought back WS Retail, and started using it heavily to sell products, there have been complaints and protests by other smaller sellers. At its peak, almost 30-40% of all products sold on Flipkart happened through WS Retail, and this was a major bone of contention between Flipkart and smaller sellers.

WS Retail was created as a logistics, retail and warehouse arm of Flipkart.

Amazon too have employed a similar method: Their largest seller is Cloudtail, which is again owed by Amazon India itself.

Now here comes to interesting part: Both WS Retail and Cloudtail have common investors: Rajiv Kucchal,who is a founding member of Infosys and a wealthy HNI, and Narayana Murthy, who is also a founding member of Infosys.

In 2015, when WS Retail was bought back, it had Ankit Nagori (Chief Business Officer at Flipkart) and Rajnish Singh Baweja (Flipkart’s Finance Controller) as Board of Members.

The reason is India’s new ecommerce policy, and online trade guidelines, which have introduced some really interesting rules pertaining to online sellers on an online marketplace.

One of the most crucial rules is that no seller should be able to control more than 25% of the products sold in an online marketplace, and this clearly changes the dynamics of the ecommerce equation.

25% rule for online sellers makes WS Retail redundant, and maybe this is the reason Flipkart’s partnership has ended with them.

From Rs 13,900 crore revenue in 2016, WS Retail’s revenue decreased to Rs 4600 crore this year.

There has been no reaction from Flipkart on this, but observers say that the decline had started a year ago.

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