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Last Updated : Dec 29, 2018 03:54 PM IST | Source: Moneycontrol.com

New FDI policy could sink Rs 5,000 crore worth of inventory of Flipkart, Amazon: Report

Executives at Amazon and Walmart-owned Flipkart are reportedly looking at ways to clear the stockpile.

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The new foreign direct investment (FDI) policy could make it difficult for Amazon India and Flipkart to sell inventories worth Rs 2,000-2,500 crore each, according to a report in The Times of India.

The Department of Industrial Policy and Promotion (DIPP) had earlier this week announced changes to FDI policy for the e-commerce space, effective February 1.

The change in policy will prevent e-commerce from selling their own products on their marketplace, and potentially stop massive discounts and cashbacks.

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E-commerce companies buy their inventory of clothes, accessories and other soft lines of products about three months in advance, the report said.

A rough calculation suggests that the two e-commerce players have each bought inventories worth Rs 2,000-2,500 crore, a source told the newspaper.

Moneycontrol could not independently verify the story.

Executives at Amazon and Walmart-owned Flipkart are looking at ways to clear the stockpile, the report said.

Also read: Govt hands massive blow to Amazon, Flipkart; bars deep discounts, cashback schemes, exclusive deals

A number of sellers, including Cloudtail and RetailNet, are looking to discuss the situation with the companies.

“This is a big problem as they weren’t expecting a shock,” a source told The Times of India.

Deals with fashion brands typically involves supply of stock for three months.

"We don't sell to these platforms unless they promise us a three-month stock purchase. They have monthly targets and we provide a certain rate based on the promise of that high volume," an executive at a fashion brand told the newspaper.

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First Published on Dec 29, 2018 03:54 pm
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