Flipkart may shrink its wholesale operations due to change in e-commerce norms

by Apparel Resources News-Desk

11-July-2019  |  2 mins read


Image Courtesy: zeebiz.com

Change in e-commerce rules is having its impact on Walmart-owned Flipkart!

After the rules for e-commerce were tightened, Flipkart has started curtailing or stopped buying products directly from companies as a precursor to shrinking, if not completely winding up, its wholesale operations.

In order to comply with India’s revised foreign direct investment rules for online marketplaces, Flipkart is asking suppliers to route their products directly to the preferred sellers on its platform, code named Alpha sellers and to wholesale ‘Beta’ sellers, who are a layer of intermediaries that Flipkart had created.

“Ultimately, they will have to shut down the wholesale business. It is not a permanent solution. The process has started,” said one person with knowledge of the plans.

Companies making products ranging from fashion to consumer electronics say that they now supply products directly to the so-called Alpha and Beta sellers on Flipkart.

Alpha entities sell to end-consumers on the marketplace, while the Beta group acts as intermediaries between Flipkart’s wholesale unit and the Alpha sellers.

Walmart-owned firm is yet to decide whether to completely shut Flipkart India, the wholesale entity, or scale it down to service only small online sellers or brick-and-mortar channels, said two executives from companies that sell products to Flipkart.

“Flipkart is curtailing supply of products from its wholesale entity to top sellers such as RetailNet and OmniTechRetail and instead wants these sellers to source directly from the brands to ensure the marketplace has an arm’s length distance for compliance,” the executives said.

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