Flipkart, a huge eCommerce company in India, has invested $201 million into its wholesale unit, in a bid to stay relevant in an already crowded market that’s been hit with industry-shaking regulatory changes recently, according to reports.
Flipkart, in which Walmart acquired a 77 percent stake for $16 billion last year, is already in competition with Amazon in the country. Industrial company Reliance Industries is also entering the fray, with the advantage of being an Indian-based company.
The investment news comes amid new regulations set forth by the Indian government, which indirectly target Amazon and Flipkart. Under the new rules, which will go into effect on Feb. 1, India will not allow eCommerce companies to sell products from businesses in which they have an equity interest.
Also, the companies can’t have exclusive agreements with sellers. For example, Xiaomi can no longer sell Mi phones only on Flipkart, which is a common practice in the country during a new phone launch.
“An entity having equity participation by eCommerce marketplace entity or its group companies, or having control on its inventory by eCommerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity,” the commerce ministry said.
The regulations are a response to complaints from traders and retailers who say eCommerce companies have an unfair advantage, and are using their inventories to sell products at extremely low prices.
Although the regulatory moves are controversial, it hasn’t stopped eCommerce growth. Recently, Google entered the market and started offering shopping search services. Amazon, for its part, released a Hindi language mobile app.
Flipkart appears to be preparing for the new eCommerce landscape, though it has made no major announcements as to how it will use the money. Analysts predict significant strategic announcements from the company in the near future.