More Fo­cus on 100 Ven­dors

The Economic Times - - Econ­omy -

WS Re­tail, owned by Flip­kart’s founders un­til 2012, cur­rently dom­i­nates the plat­form and is said to have a share that well ex­ceeds 25% of to­tal sales. For in­stance, all Flip­kart-ex­clu­sive brands such as Xiaomi, Mo­torola, LeEco, San­sui are sold through this ven­dor.

The com­pany, set up nearly seven years ago by Flip­kart founders Sachin Bansal and Binny Bansal, clocked sales of .₹ 10,163 crore or nearly twothirds of to­tal turnover in FY15, tre­bling its busi­ness from .₹ 3,135 crore in the pre­vi­ous fi­nan­cial year. Four years ago, the Bansals sold their stake to for­mer OnMo­bile Global chief op­er­at­ing of­fi­cer Ra­jeev Kuch­hal and other in­vestors.

Flip­kart said it is look­ing to im­prove the shop­ping ex­pe­ri­ence for cus­tomers.

“At Flip­kart, we be­lieve in of­fer­ing our cus­tomers the best pos­si­ble shop­ping ex­pe­ri­ence and a wide se­lec­tion of qual­ity prod­ucts and the best brands,” said a com­pany spokesper­son. “As In­dia’s lead­ing mar­ket­place, we have over 80,000 sell­ers for our base of 75 mil­lion cus­tomers. We also started a pro­gramme in Oc­to­ber 2015 to en­cour­age high-qual­ity sell­ers who can of­fer a more de­light­ful and per­son­alised ex­pe­ri­ence to our cus­tomers. The pro­gramme sup­ports ex­ist­ing and new sell­ers on prod­uct qual­ity, cus­tomer ser­vice, pack­ag­ing, lo­gis­tics and sup­ply chain.”

The new rules, which stip­u­late no ven­dor can ac­count for than 25% sales on an on­line mar­ket­place, were part of a gov­ern­ment clar­i­fi­ca­tion on the ‘mar­ket­place’ model, which is used by the top three ecom­merce com­pa­nies — Flip­kart, Ama­zon In­dia and Snapdeal. The rules also don’t al­low the mar­ket­places to of­fer dis­counts di­rectly — these have to come from the ven­dors. The ecom­merce com­pany has been look­ing to di­min­ish WS Re­tail’s promi­nence as part of its shift from an in­ven­tory-led model to a mar­ket­place one. Last year, Flip­kart bought back its lo­gis­tics busi­ness from the ven­dor, re­strict­ing it to act­ing as a sort of clear­ing house. It then be­gan sourc­ing most mer­chan­dise from com­pa­nies or brands and list­ing them as ven­dors.

“Flip­kart, which over the years had routed the bulk of its prod­ucts through WS Re­tail, has now asked sev­eral brands to sell it to other ven­dors or list them­selves as sell­ers,” said the of­fi­cials. In Oc­to­ber last year, the etailer also started an ini­tia­tive aimed at con­sol­i­dat­ing its sell­ers. Out of the 1 lakh sell­ers listed on its por­tal, Flip­kart wants to fo­cus more on 100 ven­dors that con­trib­ute two-thirds of to­tal sales.

Ex­perts feel such a move may bring some clar­ity to the etailer’s re­la­tion­ship with WS Re­tail. But it may be eas­ier to take more dra­matic ac­tion, said Ruchi Sally, di­rec­tor at re­tail con­sul­tancy firm Elargir. “Re­duc­ing WS Re­tail to 25% or less busi­ness for Flip­kart will be dif­fi­cult to man­age as they have to con­trol and mon­i­tor its en­tire ecosys­tem reg­u­larly. It makes sense to shut it com­pletely and be a mar­ket­place,” Sally said. The ecom­merce com­pany is also look­ing to di­ver­sify its port­fo­lio by sign­ing up in­ter­na­tional re­tail­ers to act as a launch pad for them in In­dia.

While talks are at ini­tial stages with some of them, the idea is to fo­cus on ex­clu­sive deals with brick-and-mor­tar re­tail­ers. “Things like hiv­ing off a par­tic­u­lar seg­ment or ver­ti­cal of Flip­kart where these global re­tail­ers can buy stake in were also dis­cussed al­though noth­ing has been fi­nalised yet,” said one of the per­sons quoted above.

Both sides could ben­e­fit, the per­son said: “Flip­kart could raise funds by do­ing so while in­ter­na­tional re­tail­ers will find a ready­made on­line busi­ness.”With brands and com­pa­nies cre­at­ing sep­a­rate chan­nels for on­line sales, they would rather part­ner Flip­kart di­rectly rather than in­volv­ing third-party ven­dors such as WS Re­tail. For in­stance, the etailer on Mon­day an­nounced an ex­clu­sive tie-up with Go­drej In­te­rio that will list it­self as a seller on the plat­form. Over­seas brands that al­ready have an off­line pres­ence in In­dia will also look to sell to Flip­kart cus­tomers di­rectly.

“Over time, we will list our brands di­rectly with Flip­kart sim­i­lar to what we do with other mar­ket­places,” said J Suresh, MD of Arvind Life­style Brands, which sells brands such as Gap, US Polo, Ar­row and Calvin Klein.

Ex­perts feel fo­cus on top ven­dors can bring clar­ity to Flip­kart’s re­la­tion­ship with WS Re­tail

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