Flipkart rallies e-tailers to counter offline retail biggies

BENGALURU: Flipkart chairman Sachin Bansal is trying to bring together e-commerce companies to create a lobby group that can counter brick-and-mortar retailers like Aditya Birla Group and the Future Group, who are seen to be influencing government policies through organizations like the Retailers Association of India (RAI).

Multiple sources told TOI that Bansal, along with the heads of several other e-commerce & internet-based companies, recently met minister of state for finance Jayant Sinhato discuss the concerns of the online sector. Bansal took the initiative to send personal invites to his counterparts in other e-commerce platforms for the meeting with Sinha.

“All key players are realizing the effect an association like RAI creates on the whole ecosystem. Most of us have our own different paths and strategies, but some issues are common to all and these could be addressed better as a group,” a senior executive who was present at the meeting said, requesting his name not be disclosed.


When contacted, a Flipkart spokesperson declined to comment on the matter. Sources said Amazon was not invited. Snapdeal co-founder Kunal Bahl was invited but could not participate because of another engagement. Bahl, sources said, communicated to Bansal that he supported the initiative.

In March, the government dealt a blow to some of the leading e-commerce players when it mandated that foreign funded ventures can operate only as a marketplace (they cannot themselves deal in goods, and can only allow third-party sellers to be on their platform), that the platforms cannot use their funds to offer discounts (only the sellers on the platform can), and that total sales originating from one seller cannot exceed 25% of total sales on the platform.

This was seen by many as a move to protect the interests of the traditional brick-and-mortar companies. E-commerce players, many of who have been funded by foreign parent companies or foreign venture capital , had been using their funds to discount products and some had helped create large third-party vendors who could more efficiently deal with products.

'We are not looking for fresh funds'

Flipkart chairman Sachin Bansal said the company is not looking at raising fresh funds. “We have enough funding to last us a long period of time,“ he said on Wednesday.


Some are likely to interpret the statement as an acknowledgement of the troubles the e-commerce major is having in raising funds at desired valuations. Rival Amazon recently announced a fresh $3 billion investment in its India operations; it had in 2014 announced a $2-billion investment. The collective sum far exceeds the $3.2 billion that Flipkart has to date raised. Its last round was $700 million in July 2015.

Bansal played down the markdowns of Flipkart's share value by some mutual funds. “Uber too was marked down by mutual funds, but it raised money at a higher valuation than in previous rounds. I don't think much about the markdowns,” he said.