In a bid to follow the footsteps of online marketplaces like Alibaba.com and Tmall, India’s largest ecommerce player, Flipkart is planning to reduce the reliance on WS Retail, the top seller on online marketplace, which currently accounts for more than 80% of the platform’s total sales. The move will allow Flipkart to concentrate better on the marketplace model. Flipkart changed its model to become a marketplace in February 2013.
Recently, the ecommerce firm has told several companies and brands, which sell on the site through WS Retail, to sell directly to consumers through its marketplace in the coming months.
As part of its new strategy, Flipkart has also informed firms that it will no longer hold their inventories in its warehouses and its logistics operators will pick up merchandise from sellers to deliver to end-consumers. Besides, the homegrown ecommerce player is looking to strengthen its mobile advertising platform. It will also build a 200-people strong team in a year for its ad business as mobile becomes its focus area for investments going forward.
Speaking on the plans, Flipkart spokesperson said, “We are always encouraging brands/sellers to increase their selection directly and indirectly on our platform — and the brands/sellers are free to make their business decisions based on commercial prudence.”
However, WS Retail will continue to be the seller for Flipkart exclusives such as the Motorola and Xiaomi handsets. WS Retail currently acts as a sort of clearinghouse for most of the goods sold on Flipkart, sourcing the bulk of the merchandise from vendors. The company was originally part owned by Flipkart founders Sachin Bansal and Binny Bansal, who later sold their stakes to a group of Indian investors and resigned from its board in 2012.
WS Retail’s revenue more than doubled to INR 3,135.3 Cr in 2013-14 from the previous financial year. If the market reports are to be believed than WS Retail still accounts for 70-75% of sales on Flipkart. Earlier in January this year, WS Retail was also looking to spin off its logistical arm Ekart into a fully-owned subsidiary.
It is to be noted that the Enforcement Directorate (ED) is currently investigating whether Flipkart violated India’s foreign exchange laws by selling products through WS Retail. Just recently, Flipkart has made its first acquisition of the year by acquiring Sequoia Capital & Sandstone Capital backed ad network AdIQuity. Earlier, it had also announced its plans to raise $5 Bn via IPO.