Wednesday 20 April 2016

Flipkart compelled to reduce WS Retail’s share; other sellers to get a fair chance
After the government introduced new ecommerce rules and regulations, it was quite clear that big changes in business models were ahead for the online biggies.
Snapdeal is happy about the fact that they always followed a pure marketplace model unlike its rivals, so they don’t need to redesign operations. Amazon needs time to assess the situation and make necessary changes.
On the other hand, Flipkart has already started making alterations. The online marketplace leader has decided to reduce WS Retail’s share in sales.

Largest seller WS Retail won’t be the largest anymore

The etailer has been trying to distance itself from WS Retail (owned by Flipkart founders) from last year. Although, it still was the biggest seller on the platform.
Now that the Department of Industrial Policy and Promotion (DIPP) has put a 25% sales cap from one seller, Flipkart will gradually reduce WS Retail’s contribution. It will happen over the next one-and-a-half years.
A source revealed, “The contribution of WS Retail will reduce to lower single digits and eventually (be) negligible in the next six-eight quarters as there are legacy issues with its operating model that question Flipkart’s FDI compliance.”

Great opportunity for other sellers

While WS Retail’s share will shrink, Flipkart will work towards increasing share of other sellers in order to increase/maintain its sales figure.
Earlier, electronics by Flipkart-exclusive brands like Xiaomi, LeEco, Sansui, and Motorola were sold only through WS Retail. However, now new merchants will get a chance to sell these exclusive products and increase their revenue.
One official disclosed, “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.
It obviously won’t be a cakewalk for Flipkart to invest in new vendors while maintaining the service quality, which was offered by WS Retail. But sellers will get an equal playing field, that’s a plus for the online vendors community.
Will Amazon follow suit by scaling down Cloudtail’s share?

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