The entire country was shocked to see the departure of Binny Bansal when Walmart acquired Indian ecommerce giant but a startup Flipkart. This is not a small thing like Deepinder Goel (CEO, Zomato) acquiring TechEagle Innovations to start drone based monitoring for food delivery. What happened next? Few months later, Sachin Bansal left the group by selling all his assets to Walmart. The dream started from the house in Kormagala, Bengaluru which became thunderous stream and must installed mobile app of every smartphone user is not having its founders.
The torch and onus came to Kalyan Krishnamurthy and team, to get the best of this floating ship with a hole at its deck. What hole? Seriously. Many news came regarding the losses in some quarters worth 3000 Crores. So where is this company heading? Is the Big Billion Day buddy losing its grounds? What kind of crisis cloud hovering over Flipkart? Is it bringing omens or some myth has been rumoured around the corridors of e-commerce hubs?
One Owl Enough to Ruin Glories:
Well all these answers can be given any expertise sitting as a delegate to defend Flipkart. But the recent issue has raised concerns for Flipkart. The Tsunami which came on 26th December 2014 hit another time in 2018 through newspapers with headline “Centre tightens rules for selling online” which clearly indicated that E-commerce firms cannot hold stake in, or control vendor selling through its platform.
This is a clarification issued by the Ministry of Commerce regarding the Consolidated FDI Policy Circular 2017. The inventory based model of e-commerce is when the inventory of goods and services is owned by the e-commerce entity and sold to consumers directly. The marketplace model is when an e-commerce simply provides an information technology platform in order to act as facilitator between the buyer and seller.
So is this the owl flipkart wants to be rid off to regain the grounds? The point it can hurt upto some level which will not be acceptable at Flipkart’s end. Firms like Ninjacart which are trying to grab the market of ecommerce in their way and in their domain. Mind you, Flipkart is not at all the Indian Version of Amazon. Flipkart though losing some essential (precisely quintessential) parts, but not a small thing and name than Amazon in India. One has to consider the timeline of establishment of Amazon and Flipkart too.
Flipkart has told the government the company has the risk of significant customer disruption if the implementation of new curbs for e-commerce is not delayed by 6 months. The new FDI restrictions from Feb. 1 bar ecommerce companies from selling products from firms in which they have an equity interest. In a letter to Industries Dept. Flipkart CEO said the rules required the company to assess all elements of its business operations, according to the privy to the communication.
Redesigning numerous elements of our technology systems to ensure that we can validate and evidence our compliance, in such a compressed period of time has caused Flipkart to divert significant resources. The policy move has jolt Walmart, Flipkart and Amazon. This policy will no doubt will raise the compliance cost and force that Amazon and Flipkart has to go through to review their business arrangements in the country.