Myntra ties up with Tech Connect Retail to comply with FDI regulations

E-commerce sector becomes a hustling-bustling domain with the coming of the festive season. Whether it’s improving logistics and warehouse network or introducing new changes to meet laws, nobody wants to miss the festive opportunity.

Aiming for the same, fashion e-tailer, Myntra has tied up with a new seller called Tech Connect Retail in order to comply with FDI regulations. Until now, seller entity Vector E-Commerce was the major seller on Myntra. However, a Livemint report said that it had completely disappeared from the website and app of Myntra by yesterday evening.

Citing four people familiar with the matter, the report said that Tech Retail now handled majority business of Vector E-commerce. They further said that the company has adopted a marketplace structure, at least on paper. It may also work with more sellers in future. For now, Tech Retail is selling maximum products on Myntra.

Myntra has so far operated a mix of B2B and B2C models. Myntra Designs Pvt. Ltd used to supply products to Vector E-commerce which in turn sold them to customers. However, according to the latest FDI rules that came into effect in April this year allowing 100 percent FDI in e-commerce marketplace, no single seller can constitute more than 25 percent of sales on an e-commerce platform.

Continuing to operate on its previous model could lead Myntra to trouble with law enforcement authorities. Talking about the same, one of the persons mentioned above said, “(Myntra’s earlier) structure could have been easily challenged legally. The law clearly states that the two entities—one that had foreign direct investment and the one that sells to the consumers—need to keep an arm’s length distance.”

Jabong, now a member of Flipkart house, had also moved to a marketplace model recently. For the purpose, it had created three new vendors namely Bren Trading, Ravenna Fashion, and Wearhouse Products Pvt. Ltd. Similarly, Flipkart also identified new sellers earlier this year in addition to its main seller entity WS Retail.