Flipkart used to work on the inventory model once upon a time when the government of India had no interest in the functioning of Indian e-commerce and Flipkart was growing at a break neck speed. Then suddenly they woke up in 2014 and released a circular stating that FDI is not allowed in B2C(Business to Consumer) ecommerce business though it is allowed in B2B(business to business). By this time Flipkart had already raised huge investments from the foreign investors which suggests that Flipkart was about to fall in the mesh of Indian bureaucracy. So, to save itself Flipkart changed itself from B2C(online retailer) to B2B.
How it did that?
To align with the policy of Enforcement directorate Flipkart adopted marketplace model. In a marketplace model, any vendor wishing to sell its product online can do so after registering with the e-commerce portal. The e-commerce portal doesn’t hold any immediate inventory rather it relies on the decentralized vendors for supply. So earlier when you ordered book from Flipkart you were actually buying from it now it’s another way round. Now if you order anything you are actually buying it from a vendor who is registered with Flipkart and located at some part of India. In the entire process Flipkart just plays the role of intermediary i.e. they virtually they converted themselves from a shopping store to shopping mall which is a B2B model and which saved them from the wrath of Enforcement Directorate. See how easily our laws can be manipulated to save crores of rupees.
What happened to its own inventory?
We all know it by the name of WS Retail and surprisingly it is also registered as seller on Flipkart.