Flipkart’s S’pore parent puts Rs 4,500cr in wholesale arm
Flipkart’s S’pore parent puts Rs 4,500cr in wholesale arm

Indian e-commerce giant Flipkart’s wholesale arm Flipkart India has received Rs 4,500 crore in what is one of the largest capital infusions for the entity, according to the latest regulatory filing with the Registrar of Companies (RoC).

The investment is the indication of aggressive plans that Flipkart has charted out to counter its closest rival Amazon, which too runs a wholesale arm.

Since raising $4 billion from marquee investors like SoftBank last year, Flipkart has largely been pushing its logistics and payments businesses, adding big bucks to rev up these verticals. Flipkart India is one of the core companies that control the etailer’s India operations.

The wholesale arm buys products in bulk from various manufacturers and then sells it to merchants who work closely with the online retailer as well as to independent third-party vendors. These merchants, in turn, sell these products to consumers on the Flipkart platform. Flipkart Internet is the other significant entity that runs the marketplace for the e-commerce major.

This entity, too, received an investment of about Rs 370 crore recently. In March 2016, the Indian government allowed 100% FDI in online retail of goods and services under the marketplace model with riders that restrict a seller from contributing more than 25% of overall sales generated on any e-commerce site.

This is why companies like Flipkart and Amazon, which cannot work on the inventory model, prop up few big merchants and help them cater to the growing consumer demand. Having a wholesale arm helps in doing that as the e-tailers cannot directly sell to shoppers. According to the RoC documents, Flipkart’s Singapore parent was issued each share of Flipkart India for Rs 23,900 for raising the new capital.

The e-tailer’s wholesale entity reported revenues of Rs 15,264 crore for the financial year 2017 compared to Rs 12,818 crore in the previous year, showing a growth rate of about 19%. After a tough 2015-2016, Flipkart had managed to make a turnaround last year with a bump in growth numbers on the back of smartphone sales.

It also successfully raised massive funds to fight Amazon as Japan’s SoftBank came on board as its largest investor.

 
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