And the Fall of Indian eCommerce started ?
The Indian government shocked the e-Commerce Sector on Thursday with policy changes which placed strict norms on the e-tailers. The new e-commerce policy tightening norms for e-commerce firms having foreign investment, forbids them from holding exclusive sales, offering huge discounts & forces them to redo their cash-back conditions, among other things.
The Government tightened the norms for e-commerce players on pretext of protecting domestic retailers & shopwalaz from impact of deep discounting and cash-backs by the online tailers. This move also meant to give the brick & mortar businesses a shot in the arm.
The government barred online marketplaces like Flipkart and Amazon from selling products of companies where they hold stakes and banned exclusive marketing arrangements that could influence product price.
“This move would completely stop influencing prices by e-commerce players. This will also ensure better enforcement of FDI guidelines in e-commerce companies,” a senior official said.
“Inventory
of a vendor will be deemed to be controlled by e-commerce marketplace entity if
more than 25 per cent of purchases of such vendor are from the marketplace
entity or its group companies,” the commerce and industry ministry’s press
note said.
E-commerce marketplace entity “will not mandate”
any seller to sell any good “exclusively” on its platform
“only”, the note said. “Any entity having equity
participation by any e-commerce marketplace or its group companies, or having
control on its inventory by e-commerce marketplace entity or its group
companies, will not be permitted to sell its products on the platform run by
such marketplace entity”.
Like any service logistics (these services include logistics, warehousing, advertisement, marketing, payments, financing etc.) provided by e-commerce companies to vendors in which they have direct or indirect equity participation or common control stake, should be fair and non-discriminatory.
The New policy would be effective from February 2019.
Amazon India spokesperson said: “We are evaluating the circular”.
In response to the new e-commerce policy Flipkart said, “Government policy changes will have long-term implications for the evolution of the sector & whole ecosystem. It’s important that a broad market-driven framework through right consultative process be put in place in order to drive the industry forward,”.
Summary of changes in e-Commerce policy looks like;
- Marketeplace & Ecommerce companies can enter into transactions with sellers only on B2B Basis.
- They will not exercise ownership or control over inventory
- Cash Back provided by group companies of marketplace entity to buyer shall be fair.
- Marketplace entity will not mandate any seller to sell any product exclusively on its platform only.
For more on this we will get back soon with all clarifications.
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