Indian e-commerce giant Flipkart has invested about $201 million into its wholesale unit as the company seeks to fight off Amazon amid intense competition and regulatory changes in India, according to LiveMint and other published reports.
The move comes after new rules were proposed last month that would restrict e-commerce companies in India from owning large minority equity stakes in other companies that sell products on their marketplaces, according to Business Day.
Indian industrial conglomerate Reliance also appears poised to enter the highly competitive market this year with plans that reportedly involve a teaming of its Reliance Retail unit and its Reliance Jio mobile communications subsidiary, according to a Financial Times story.
Going into last year, the e-commerce market in India was already a hotly competitive one in which Amazon was challenging Flipkart, and making headway, for share in a rapidly evolving market. That was all before Walmart spent $16 billion for an approximately 77% stake in Flipkart, however, making India the latest battleground for the ongoing tussle between the two U.S. heavyweights.
Even in the last couple of months, things have become more intriguing, as Google recently entered the fray with shopping search services, Flipkart's CEO suddenly departed over personal misconduct allegations and Amazon upped its game with a Hindi language mobile app. Now Reliance is jumping into the e-commerce market with ambitions to beat both Flipkart and Amazon.
Add in a new set of proposed regulations that could drastically alter how Flipkart and Amazon have been doing business in this market, along with their prospects for future revenue, and there's a sense that almost anything can happen in India's e-commerce market in the coming years.
Flipkart's investment in its wholesale unit appears to be part of its preparation for the market changes ahead, although it's not entirely clear how the money will be used. In any case, market watchers shouldn't be surprised if Flipkart has some big strategic announcements in the near future as one of the world's most exciting e-commerce markets continues its bumpy evolution.