Although, the latest Live Mint report about Flipkart buying back its logistic arm eKart from WS retail, proves that the etailer won’t shy away from taking a move backward too, if it will help them to checkmate the competitors and win the game.
In order to pave its way through the strict FDI policies and ambiguity over rules & regulations meant for ecommerce business in India, Flipkart has been trying various tricks.
Let’s talk about the latest one.
First, Flipkart formed Instakart Services Pvt Ltd. Through Instakart, the company bought its logistics business from WS Retail, which is the biggest seller of the platform. This was done with an intention to remove complexities from its structure before Flipkart’s plans for IPO materializes.
WS Retail (WSR) was formed and owned by Flipkart founders Sachin Bansal and Binny Bansal from 2009 till 2012. After Flipkart’s business relationship with WS Retail raised eyebrows, which led to an investigation, the co-founders resigned from their positions in WSR and sold their shares.
No surprise here that the major portion of the stake fell into the arms of Flipkart loyalists and the purpose was to avoid the investigation and skip the ‘flouting FDI rules’ controversy.
Apart from being a registered merchant, WS Retail used to control the logistic business, the same which Flipkart bought back recently. Now only the trading business remains as far as WSR is concerned.
Buzz is that the etailer is planning to phase out its association with WS retail gradually and function as a pure marketplace platform. Flipkart also plans to discontinue seller commissions and focus on advertising revenue, thus the rumour that it will move away from marketplace too.
From setting up a very complicated maze to simplifying its structure (at least projecting that), we wonder how true is this statement “follows the highest standards of corporate governance for all its business activities. We ensure that every transaction we undertake, adheres to all applicable procedural, legal and regulatory norms, including fair value norms”, given out by Flipkart.