Flipkart’s bid to contain impact of new laws

Flipkart CEO Kalyan Krishnamurthy has told select executives of third-party brands that the Walmart-owned e-tailer’s commerce business would be able to avoid any major impact from the recent government circular on FDI in e-commerce.

The company is said to be taking a number of steps to deal with the fallout. Sources said it is in talks with a bunch of entrepreneurs/startups who can set up retail entities to sell on Flipkart. It is also said to be talking to its existing base of smaller sellers to increase their exposure to the etailer’s platform.

These moves could help the company comply with the new laws, which demand that not more than 25% of a seller’s sales should come from a single marketplace.

They also require that marketplaces not have any stake in a seller. Working closely with a larger base of sellers, without taking equity stakes, is expected to help ensure that the quality and quantity of products on offer do not suffer, and delivery speeds are not adversely affected.

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“As more details emerge from a legal perspective, it seems these companies might not be hit as hard as anticipated initially. Krishnamurthy has communicated that business volumes are likely to continue as per existing trajectory without a rude shock, for now,” a senior executive aware of the matter said.

Sources said that Amazon too might need to do similar changes. The company has maintained it is still studying the legality of the options available with the firm.

A Flipkart spokesperson said it is important that a broad market-driven framework be developed through a consultative process. “We hope to be able to work with the government to promote fair, pro-growth policies that will continue to develop this nascent sector, making India a competitive economy and driving benefits to consumers, small suppliers, infrastructure development, and innovation,” she said.

On Tuesday, the Internet and Mobile Association of India (IAMAI) issued a statement saying the government should defer the deadline given in the December circular.