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Flipkart to strengthen ties with its top retailers

06 April 2016

India's largest online retailer Flipkart is working more closely with its top sellers as it looks to improve customer experience to take on an increasingly aggressive American rival Amazon.

This programme, which was started last year but has got a renewed thrust after Binny Bansal became chief executive, is likely to be restricted to around 100 sellers on the platform.

"This programme targeted at the mega sellers will help Flipkart control the customer experience," said a source familiar with the development. "The management thinks that customer experience in a marketplace tends to get marginalised."

The move is also likely to help Flipkart reduce the share of sales from the main seller on its platform, WS Retail, which it claims has been dwindling. WS Retail was part-owned by Flipkart founders Sachin Bansal and Binny Bansal, emerging as a major seller on its platform. Subsequently, the Bansals sold their stakes in the latter to a group of Indian investors and resigned from its board in 2012.

As these mega sellers get bigger, it will also help Flipkart comply with recent guidelines that no single vendor can account for more than 25 per cent of the sales on an online marketplace.

Flipkart confirmed the programme. "This programme which we started in October 2015 is aimed at encouraging high quality sellers who can serve our customers better," said a Flipkart spokesperson. "The programme will support existing and new sellers on product quality, customer service, packaging, logistics and supply chain."

The Bengaluru-based company has been looking get a tighter grip on delivery and fulfilment experience, starting with reducing the share of outsourced deliveries and doing more of them in house. The second step is working more closely with top sellers.

Flipkart's moves come at a time when India's top online retailers including Snapdeal, Amazon and PayTM have been busy getting thousands of merchants on board their platform.

Flipkart itself has increased the number of sellers on its platform from less than 10,000 at the start of 2015 to over 85,000 registered sellers now. Rival Snapdeal recently said that it has doubled the number of sellers on its platform in the past one year to more than three lakh, and is on track to meet its target of five-lakh sellers by the end of 2016.

But even as the number of sellers on these platforms grows, most of the sales are being driven by top merchants and categories like smartphones, electronics and fashion. "Around 2,000-3,000 sellers control 80-90 per cent of sales on all these platforms," said an industry watcher.

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