Flipkart Finds Its Alpha Which Could Help It Comply With FDI Norms

For the ecommerce giants — Flipkart and Amazon — FDI guidelines have been tough to comply with and both are looking to explore ways to comply with the new rules. 

Just yesterday, we reported that Amazon is looking to strengthen its footprint in the FMCG category with the help of its private brand Presto! which offers products in categories such as Harpic, Lizol and Pril at a discounted price.

Now, Walmart-owned Flipkart is building a layer of B2B entities code-named as Alpha which will act as intermediaries between its wholesale arm, Flipkart India and its prominent online sellers, said an ET report.

Flipkart has appointed eight to nine such entities as alpha sellers who will be responsible for purchasing goods from Flipkart India and supply them to consumer facing beta sellers who will offer the product on the marketplace.

This initiative comes after the new FDI in ecommerce guidelines came into effect from February 1. The move will help the company comply with the rule which prohibits marketplaces from making more than 25% of purchases of a vendor.

The guidelines which are aimed at promoting the domestic players added that no ecommerce marketplaces will be allowed to mandate a seller to sell products exclusively on its platform.

Initially, Flipkart’s preferred sellers such as Super-ComNet, OmniTech Retail and RetailNet used to buy goods from the wholesale unit directly and then put it up for sale for customers. However, with this step, these sellers will have to source their products from different alpha sellers.

According to the sources close to the development, the company has been onboarding alpha intermediaries and beta sellers as a part of its business restructuring.

Flipkart is also in talks with offline retailers as well as distributors of Samsung, Xiaomi and FMCG products to enrol them as sellers on its platform to drive its sales.

At a time when the new guidelines had caused Walmart’s share price to fall by 2.06% to $93.86 on the New York Stock Exchange, losing $5.7 Bn in market capitalisation, the US-based brokerage firm Morgan Stanley had indicated that Walmart may exit Flipkart.

However, putting the fears to rest CEO Kalyan Krishnamurthy reiterated Walmart’s commitment to lead the ecommerce sector, in a letter addressed to its employees.