Amazon, Flipkart Loses 30% Of Sales; Walmart May Quit Flipkart Due To New Ecommerce Policy

We are witnessing the darkest hour for Indian ecommerce right now, and this has happened solely due to the new ecommerce policy being enforced by Govt. of India.

It’s a catastrophe, as Amazon and Flipkart have lost 30% of their sales in India; meanwhile, a reputed research firm has predicted that Walmart may entirely quit Flipkart and leave India.

And they have solid evidence to back this claim as well.

Walmart Can Quit Flipkart And Leave India?

Renowned Wall Street-based research and financial organization Morgan Stanley has claimed that Walmart may soon leave Flipkart, and end their operations in India.

In a report published on February 4th, the research firm stated that “an exit is likely, not completely out of the question, with the Indian ecommerce market becoming more complicated”.

As we can observe here, the claim that Walmart may quit Flipkart has been attributed to the new ecommerce policy, which prohibits FDI powered ecommerce marketplaces from selling their own branded products, and selling via their vendors and sellers, besides clamping down on discounts and offers.

Why Can Walmart Actually Leave Flipkart?

In the report titled ‘Assessing Flipkart Risk to Walmart EPS’, Morgan Stanley has used the example of Amazon and China.

After investing billions of dollars into their Chinese expansion, Amazon decided to quit in last 2017. However, that was their AWS or Amazon Web Services businesses, but still, there is a precedent of such massive quitting of a country, by a biggie.

The report stated, “There is a precedent for an exit as Amazon retreated from China in late 2017 after seeing that the model no longer worked for them,”

The report stated that Flipkart will have to stop selling approximately 25% of the products due to the new ecommerce rules. And this will have long term implications.

Walmart has denied such developments, as their official statement stated: “Despite the recent changes in regulations, we remain optimistic about the ecommerce opportunity in India given the size of the market, the low penetration of ecommerce in the retail channel and the pace at which it is growing. As Walmart scales in India, the company will continue to partner to create sustained economic growth across agriculture, food and retail. Future investments will support national initiatives and will bring sustainable benefits to the country.”

Amazon, Flipkart Experience 30% Dip In Sales

Meanwhile industry reports are claiming that ever since the new ecommerce policy came into picture, ecommerce biggies Amazon and Flipkart have lost 30% of their sales.

Private labels on Amazon such as Symbol, Myx, Solimo and Basics are already off-the-shelf, as their biggest retailers: Cloudtail and Appario have stopped selling.

Yesterday we reported that Cloudtail and Appario will stop replacing items bought via them after January 31st.

Amazon has a 5% stake in Shoppers Stop, and all products have been delisted from there as well. Exclusive deals and deep discounts have already vanished, which is directly impacting the bottomline.

Flipkart is relatively less impacted, as they have stopped selling via WS Retail, their largest retailer where they also have a stake; and now, they are mainly selling via 3rd party trusted resellers such as RetailNet, SuperComNet, India Flash Mart, Omnitech Retail and Trunet Commerce.

However, big-ticket products such as iPhone and Pixel smartphones are being sold without any discounts now, and this has resulted in less sales.

All India Online Vendors Association (AIOVA), which has around 30,000 online sellers, have said that there has been no impact on their sales volume.

Amazon took a diplomatic stand, they said,  “All sellers make their own independent decisions of what to list and when and we cannot comment on that.” Flipkart hasn’t yet responded.

The story is still developing. We will keep you updated, as more details come in.