Flipkart loses bid to sell food online
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Amazon-owned Flipkart has been blocked from entering the food-retail business by Indian regulators who had deliberated for almost a year on an application.
Subsidiary Flipkart FarmerMart had applied to sell foodstuffs grown or manufactured in India online via its marketplace and on apps. However the company was told by the Department for Promotion of Industry and Internal Trade (DPIIT) marketplace, it cannot add food to its platform as a foreign-owned retailer.
Foreign direct investment in retail has long been a controversial issue in India and only in the last several years have multinational retail giants been allowed to enter the market, usually with strict requirements for a proportion of goods they sell to have been manufactured in India.
The government has recently tried to tighten laws to ensure companies like Amazon only act as third-party marketplaces, allowing local companies to sell on its platforms, rather than develop their own inventories and become retailers in their own right.
Flipkart had, however, been hoping to form supplier alliances with farmers and growers to create its own brands – rather than import all of the products it would sell.
Establishing such strong supply agreements would also potentially have helped Flipkart expand into the brick-and-mortar retail market.
Questions & Answers
Q.Which specific regulator blocked Flipkart's application to sell food online?
Which specific regulator blocked Flipkart's application to sell food online?
The Department for Promotion of Industry and Internal Trade (DPIIT) marketplace informed Flipkart that it could not add food to its platform. This decision came after Indian regulators deliberated on the application for almost a year.
Q.What kind of food was Flipkart FarmerMart planning to sell if its application had been successful?
What kind of food was Flipkart FarmerMart planning to sell if its application had been successful?
Flipkart FarmerMart had applied to sell foodstuffs grown or manufactured in India. They intended to offer these products online via their marketplace and associated apps to consumers within the country.
Q.What was Flipkart's proposed strategy for sourcing food products?
What was Flipkart's proposed strategy for sourcing food products?
Flipkart had hoped to form supplier alliances with local farmers and growers. Their intention was to create their own brands from these partnerships, rather than importing the products they would sell to customers.
Q.Beyond online sales, what other retail ambition did Flipkart have with its food sales plan?
Beyond online sales, what other retail ambition did Flipkart have with its food sales plan?
Establishing strong supply agreements with farmers and growers for food products could have helped Flipkart expand into the brick-and-mortar retail market. This suggests a broader strategy than just e-commerce.
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