Talking to us on a range of questions which we put up, a high-positioned Flipkart executive answered all, and revealed some interesting points as to why X-Box is selling in India exclusively through Amazon, allegations of FEMA violations on Flipkart and more.
Flipkart, which is India’s largest e-commerce company, recently witnessed two high-octane, exclusive launches through its website. Both of them being smartphone vendors. While Motorola’s sale did not experience issues, Xiaomi’s Mi3 sales saw Flipkart crashing repeatedly, thus highlighting the poor state of infrastructure in place.
When asked, as to what impact, did it have on Flipkart, the official said that the situation was “embarrassing“. Explaining on Flipkart’s plans to improve upon that failure, the official clarified that the e-commerce giant has been building up infrastructure, buying servers, and constantly improving its software, so as to avoid future crashes.
Just a few days after those repeated crashes, Microsoft announced that it will be selling its next-gen gaming console, the X-Box One, exclusively through Amazon. Asked on whether Flipkart lost the X-Box One launch due to its crashes, the official unhesitatingly said,
We passed on Microsoft. They came to us, but we passed on. None of these exclusivities (in electronics) going away from Flipkart, are because of these (crashes).
We then moved on to questions regarding the recent accusations on Flipkart for allegedly violating FEMA ( Foreign Exchange Management Act ). These violations have reportedly resulted in a Rs. 1,000 crore fine against the e-retail company. Asked on what Flipkart has to say on that matter, the official said,
Flipkart is a home-grown company. We have been creating Jobs in India. There are 14,000 people working (in Flipkart), including sellers and buyers. We are in “full compliance” with the laws of the land. There is full transparency and we are in full co-operation to all questions, being put up.
These statements, the first official ones from Flipkart on this matter, have clearly confirmed that Flipkart is indeed facing charges by Enforcement Directorate over FEMA violation by its holding company, WS Retail. We will have to wait for official statements from the ED, on the investigation, to see as to what amount of damage, does it bring to Flipkart.
This investigation, first came into light when 2012 Anand Sharma, the then commerce & industry ministry informed the Parliament about ED’s scanner on Flipkart. Not only Flipkart, a recent report also suggested that over a dozen other such e-retail companies wee under Directorate’s scanner.
Further talking to us on what differentiates Flipkart’s $1 Billion investment from U.S. based Amazon’s $2 Billion, the official said,
This money ($1 billion) is a huge amount of money. Flipkart has “earned” it by “working hard”. On the other hand, Amazon, is just “transferring” money, from “one pocket to another”.
Amazon had pooled in an astounding $2 Billion to its Indian arm, just a day after India’s largest e-commerce marketplace, Flipkart raised a staggering $1 Billion from its existing investors.