WS Retail, one of the largest sellers on and contributors to Flipkart’s revenue, has pulled out of the e-commerce platform, reports the Times of India. Flipkart had reportedly reduced its dependency on the retail arm because the latter had trouble sustaining operating. The report adds that WS Retail used to contribute to 30-40% of Flipkart’s overall sales, but its revenues had declined 67% in FY 2017, while the losses increased to Rs 24 crore.
WS Retail was formed in 2009 and was a wholly owned subsidiary of Flipkart Online Services as a way to work around the country’s FDI rules. It seems that Flipkart took steps to reduce this dependency on the retailer by diversifying its seller base and reducing employee, transportation and freight costs in 2017. There’s a distinct possibility that Flipkart also broke up WS Retail into a cluster of sellers on the platform.
Readers would be interested to know that large retailers WS Retail on Flipkart and Cloudtail on Amazon are respectively owned by Rajiv Kucchal (a founding member of Infosys and also a HNI), and Narayana Murthy (also a founding member of Infosys), whose Catamaran Ventures Amazon has a joint venture with.
Strangely, Amazon India does have a seller named WS Retail on its platform. “Just launched” on Amazon but without any products, the description reads, “We are the suppliers of home products”
Unfair practices and vendor complaints
Offline traders bodies have pointed out how e-commerce players such as Flipkart follow unfair practices. (Read more here and here). Earlier this year, the All India Online Vendors Association (AIOVA) filed a petition against Flipkart with the Competition Commission of India (CCI), for abusing its dominant position in the e-commerce space. AIOVA represents about 3,500 sellers present on various e-commerce platforms like Flipkart, Amazon and Snapdeal.
In its petition, AIOVA wrote that Flipkart India, the subsidiary of Flipkart Singapore, is a wholesale dealer which acquires goods from various parties and immediately sells the goods to retail sellers like WS Retail Services and others at huge discounts, who would subsequently sell those goods at unmatched prices as sellers on internet platform under the name Flipkart.com. It adds that this kind of “preferential treatment and discriminatory conduct”, is prohibited under the Competition Act. AIOVA also alleged that Flipkart is “killing many independent sellers who depend on its platform for their livelihood.”