Flipkart has begun winding down its wholesale business in India with India’s draft e-commerce policy placing limitations on the ‘inventory model’ being followed by e-commerce websites, Economic Times has reported.

Flipkart, which is now majority owned by Walmart, will soon decide on entirely folding the wholesale arm - Flipkart India, or to scale it down to service sellers on the platform, the report says. Company executives are encouraging the sellers to buy directly from the companies with the strategy having been kicked off in April-May.

“Flipkart is curtailing supply of products from its wholesale entity to top sellers such as RetailNet and OmniTechRetail and instead wants these sellers to source directly from the brands to ensure the marketplace has an arm’s length distance for compliance,” the executives said.

The draft e-commerce policy places importance on the marketplace model as opposed to the inventory model in favour of the smaller sellers and brick and mortar stores in the country.

As per the policy, sellers with over 25 per cent supply from affiliates of the e-commerce firm are deemed to be controlled by it. Flipkart, thus, had to come up with a temporary solution involving intermediaries between its wholesale business and the sellers on its platform.