Flipkart India, the e-commerce giant's wholesale business arm, has bagged its second capital infusion this calendar year from the Singapore-based parent entity, Flipkart Private Ltd. As per the regulatory filings, the latest investment is to the tune of Rs 1,616 crore and it comes in just ahead of the company's flagship Big Billion Days event. This sale, scheduled for September 29 to October 4, aggressively vies against Amazon's Great India Festival, making for the biggest festive showdown in the country.
As per filings made with the Ministry of Corporate Affairs, Flipkart India allotted 4,64,403 equity shares to its parent entity at Rs 34,800 per share, The Economic Times reported. Previously, in January, the wholesale unit had received Rs 1,431 crore from the parent firm. Etailers use their wholesale units as distribution channels that directly source products from brands and supply them to third-party vendors to sell on their online marketplaces. Flipkart and Amazon India had increased focus on their respective wholesale B2B business - which spells more control over the quality of products as well as the supply chain - following regulatory changes in early 2016.
But the revision in the foreign direct investment rules for the ecommerce sector in December, specifically the introduction of a 25 per cent cap on the goods sellers can purchase from an ecommerce company or its affiliates, caught the arch rivals off guard. While this caused some temporary disruption in sales, both firms told their investors that they did not see too much of a slide in sales due to the new regulations. While Flipkart and Amazon continue to use their B2B units for sourcing, a large part of the inventory is reportedly being sent by brands directly to preferred sellers.
Edited by Sushmita Agarwal