When 100% FDI became a reality in Indian ecommerce, online retailers were forced to maintain a 25% sales cap per seller.
In an attempt to comply with the government norms, online marketplaces, Flipkart and Amazon India decided to split their own selling units and form alliances with big brands. Online Fashion portal Myntra, on the other hand, chose to reduce dependence on Vector Ecommerce.
The Flipkart owned fashion etailer is now working with a new exclusive seller, Sane Retails, to ensure it follows the 25% cap on overall sales by a single seller on its platform.
Why is this seller so special?
People with knowledge of the matter said this association is mainly for the sale of private brands. These kinds of commodities contribute to 22-23% of total sales on the platform; making Sane Retails an alpha seller on the platform.
Alpha sellers are the driving force behind sales of online retailers. They receive better access to fulfilment centres which can offer them adequate inventory support and speedy delivery. In return, etailers receive more control compared to third-party online sellers when it comes to:
Originally Vector Ecommerce provided 80% of Myntra’s overall sales. As a result, Myntra has been reducing its dependence on the seller to avoid trouble with the Department of Industrial Policy and Promotion (DIPP). Since Sane Retails’ brands contribute a good portion of business, most of the private labels on Myntra are sold through it.
A source aware of Myntra’s association with Sane Retails said, “The government has not taken any action on etailers yet, giving them ample amount of time to meet the guidelines. Now, to make sure their business structure does not get challenged by the authorities, Myntra is working closely with this seller.”
But, instead of taking chances, Myntra introduced the concept of alpha sellers with Tech Connect Retail to sell more and now Sane Retails, which in turn have reduced Vector Ecommerce’s sales for the ecommerce company.