Walmart operates in 27 countries and has the largest warehousing stores and retail corporations. Walmart began in Bentonville, Arkansas in the year 1960s. The retail chain started offering low priced products in a wide range which helped Walmart get a competitive edge in the market. Their total revenue is $482 billion and has 2.3 million associates. Walmart has 11,530 stores across the Globe.
But the tables have turned now. With the Indian start-ups offering products at heavy discounts Walmart now faces tough competition. This has been possible as the online retailers are collaborating with these start-ups.
A few months back the Indian Government decided to lay restriction on the online retailers. They could not directly sell a product manufactured by their group company. Which helped them selling their products heavy discounts in comparison to the other retail platforms. The feud of GOQii and Walmart’s Flipkart initiated more or less in the same period.
The Feud between GOQii and Flipkart
GOQii sued Flipkart in May 2019 in Mumbai court. The plaintiff appealed that devices were discounted by 70% to the retail price, which was much more than both the parties agreed to.
Flipkart clarified that discounts were determined by third-party companies that sell on the e-commerce website and they were not a part of it. The case hearing is on 7th June 2019.
By burning billions of dollars Amazon and Flipkart deeply discounted some of their products, to persuade customers onto their sites. They were expecting that customers will buy those products.
By adapting to heavy discounting strategies, small traders, startups and associations may grab marketplaces.
On behalf of 4,000 online sellers, all online Indian vendors association decided to file a plea and join GOQii’s case against Flipkart.
Flipkart takes legal compliance seriously and complaints with Indian law. In India, GOQii was the second-biggest player in India with a 19 % market share. Xiaomi and Samsung dominate the market.
Agreement with Flipkart
GOQii signed an agreement with Flipkart unit, where they have mentioned that even after discounts, products should not sell below 1,999 rupees and 1,499 rupees after discount.
Flipkart started selling those products for 999 rupees and 699 rupees in May 2019 according to the GOQii and pass a legal notice. GOQii said Flipkart is providing “unauthorized” discounts and resorting to “predatory pricing” which defiance their agreement.
Flipkart sells goods to re-sellers as it is a business-to-business wholesale venture.
Stocking and selling own inventories on the website is prohibited in India, as e-commerce firms are doing the same. Their wholesalers purchase different types of goods and sell them to re-sellers and they use Flipkart’s website to sell those goods to customers.
Flipkart does not control prices which are determined by re-sellers.
In February India’s foreign investment introduced rules for Flipkart and Amazon to sell their products. Products had equity interest and it stopped their sellers to sell exclusively on their website.
The mains focus of the policy is to help small traders and aimed at obstructing deep discounts, but it shocked Walmart as it had closed its biggest deal on May 2019, by investing $16 billion in Flipkart.
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