Why Flipkart is selling WS Retail’s warehouse space to sellers

Flipkart is currently offering a deal of a different kind.India’s largest e-commerce firm is hawking warehouse space once occupied by WS Retail, which at one point accounted for nearly 80% of total sales on the Flipkart platform, to companies in return of “priority” seller status on the marketplace, three top executives at fashion brands said.
A Flipkart executive, meanwhile, said the warehouse space that the company is offering is owned by its logistics arm, e Kart. According to industry executives, the space has become vacant as Flipkart cut its reliance on WS Retail, which was originally part-owned by the e-commerce company’s founders Sachin Bansal and Binny Bansal.
The Bansals sold their stake to a group of Indian investors and resigned from its board in 2012, but WS Retail remained the top seller on the Flipkart platform, with its turnover jumping three-fold from a year earlier to Rs 10,163 crore in fiscal 2015 – more than the combined sales of top brick-and-mortal retailers such as Shoppers Stop, Future Lifestyle, Trent and Pantaloons. Its sales on the platform have now shrunk, say industry sources, but no details are available.
“They have already spent money on the infrastructure and warehouses are lying empty because WS Retail is not buying goods anymore,” said a top executive of a company that Flipkart had approached for warehouses in the Delhi region and Hyderabad. “They want us to use that infrastructure. They are telling large dealers to move into their warehouses and they say they will guarantee and will give priority on their platform.
It has picked in the last month or so,” he said, speaking on the condition of anonymity. The chief executive of a foreign consumer brand said Flipkart is “completely phasing out” sales through WS Retail.
Several other top executives ET spoke to said Flipkart is trying to fill the gap created by WS Retail by enrolling some large third-party vendors to sell prominent brands on the marketplace. It is unclear how much warehouse space has been left vacant by WS Retail. Analysts assume it to be quite substantial. An eKart spokesperson said it has expanded the warehouse space to 1.5 million square feet and is offering that to sellers.