Flipkart's Singapore parent infuses Rs. 4,500cr into India wholesale arm
What's the story
Flipkart India has raised Rs. 4,472cr from its Singapore-based parent company for its wholesale unit, its single largest fund infusion in past years. This is the third fund injection in recent weeks. Earlier, it had put Rs. 1,148cr into its fashion arm Myntra, and another Rs. 370cr into Flipkart Internet, its online retail platform. These signal its aggressive plans to take on its rivals.
Wholesale
How Flipkart's wholesale arm functions
Flipkart's wholesale arm buys products from manufacturers and sells them to third-party merchants, who in turn sell them to consumers on Flipkart. This is because under India's FDI rules, a seller cannot contribute more than 25% of the overall sales on an ecommerce site. With this model, ecommerce companies regulate within rules as well as retain a hold on their inventory.
Plans
What is next in Flipkart's plans?
Flipkart is focusing on its online retail business, with emphasis on driving up the number of consumers. Chief executive Kalyan Krishnamurthy had said that its focus points this year are furniture and grocery; the latter is still in its pilot phase and only available in Bengaluru. Flipkart has other plans too, including developing its in-house brands and B2B commerce to sell to customers globally.
Figures
Last year, Flipkart raised over Rs. 26,000cr from SoftBank, others
In 2015-16, the company was reducing investments to stem potential losses, but then raised $4bn (Rs. 26,100) from marquee investors like SoftBank and Tencent last year. Since then, it has been pushing its logistics and payments businesses. It is now in talks with Wal-Mart for funds. Last year, its revenue rose to Rs. 15,264cr from Rs. 12,818cr in 2016, a jump of 19%.
Amazon
Amazon meanwhile focusing on grocery and Prime program
Meanwhile, Amazon has also been raising investments; in FY18, its wholesale arm has drawn Rs. 8,150cr from its US parent till now. Amazon too is investing heavily in grocery. It already runs its Pantry, Now and other daily-use items in India. Another large chunk is going into Prime, its loyalty program with exclusive offers for subscribers as well as video and music streaming services.