Flipkart Buys Back Its Logistics Arm From WS Retail

In a bid to simplify its structure ahead of its speculated IPO in the coming years, India’s largest eCommerce website Flipkart, has bought back its logistics service company from WS Retail, which is currently the largest seller on Flipkart’s seller platform.

The official documents, acquired by Mint, suggest that the acquisition has been made through a new entity called Instakart Services Pvt. Ltd. Five people familiar with the matter, on the condition of anonymity, also suggested the same.

Now, WS Retail has only one business left – selling products on Flipkart and that will continue to remain for coming years. However, the company is also making efforts to move ahead of WS Retail as it wants to grow its marketplace model.

WS Retail, created in 2009, was originally owned by Flipkart founders Sachin Bansal and Binny Bansal. They sold their stakes in the company to a group of Indian investors and resigned from its board in 2012 as Indian laws don’t allow foreign investment in e-commerce companies that sell directly to customers.

Instakart Services was registered in June. It has Ankit Nagori (Chief Business Officer, Flipkart) and Rajnish Singh Baweja (Finance controller of Flipkart) as the company’s shareholders and directors.

The company received Rs. 127 crore from Klick2shop Logistics Services International Pte, a company registered in Singapore. Klick2shop was incorporated in February and is registered under the same address as Flipkart Ltd, the group’s holding company, in Singapore.

WS Retail’s revenue more than doubled to Rs. 3,135.3 crore in 2013-14 from the previous financial year. It accounts for 70-75% of sales on Flipkart. The company currently has more than 45,000 sellers on its portal.

Flipkart, taking cue from its rivals bakers Alibaba, is also planning to introduce advertising. It will reduce the commission charge from third-party sellers and will instead charge them for advertising, payments and logistics.

In an email conversation with Mint, Flipkart’s spokesperson said,

We, as a policy, do not comment on specific transactions. oreover, Flipkart follows the highest standards of corporate governance for all its business activities. We ensure that every transaction we undertake, adheres to all applicable procedural, legal and regulatory norms, including fair value norms.