The Indian government plays the role of a miserable party celebratory Walmart Amazon, after announcing new regulations that appear to be aimed at hampering the efforts of the American duo to develop their business in India.
The country's online trade volume is expected to exceed $ 100 billion a year by 2022 from $ 35 billion today as more Indians join the Internet, According to a report co-authored by PwC. But 2019 may be a completely different year An update of the country's foreign direct investment policy It seems that FDI has ended the practice of discounts, exclusive sales and more.
The three main meals of the new policy, which will be issued on February 1, are a ban on exclusive sales, a ban on retailers selling products on platforms calculated as investors, restrictions on discounts and cashback.
Online retailers have been able to get a splash by linking brands to exclusive sales over the Internet, especially in smartphones, where Amazon, for example XIAOMI And Flickrart Cooperated with Oppo. The new guideline appears to end this practice, with further restrictions on the complexity of relationships with vendors. From February, brands will be banned from selling more than 25 percent of their sales across any single e-commerce market.
Beyond the restriction of companies such as Oppo – Xiaomi giving priority to its Mi.com sales site – the 25 percent judgment is a headache for Amazon, which runs a number of joint ventures with Indian retailers. These JVs are designed to get around Ruling on 2016 Which prevented foreign e-commerce companies from owning inventory, but now it seems to be banned.
CloudTV India (49:51 JV between Amazon and Catamaran Ventures Amazon's largest retailer, while another major application is Appario Retail, a collaboration with Patni Group. Together, both sell more than 25 percent of the products on Amazon, and use exclusive deals partially owned by Amazon. These are three strikes
These rules will have Amazon and Walmart-Flickrart Work on finding alternatives, but there is more with restrictions on discounts and cashback offers, which can significantly shatter the attractiveness of online commerce, and that brick and mortar retailers have been undermined with substantial subsidies.
Here's the relevant part of the note:
E-commerce entities offering a market directly or indirectly will not affect the selling price of goods or services and should maintain the level of competition …
The money provided by the group companies from the market entity to the buyers must be fair and non-discriminatory.
Exactly what constitutes a "level playing field" or "fair" may be available for interpretation, but it is clear that this update gives offline retailers a way to protest pricing on online retail sites.
The first idea is that these new updates focus on the basic tenants of the business models that make e-commerce what it is today.
"You will kill competition and there will be nothing to differentiate Internet retailers" Amarjeet Singh, a partner at KPMG, href = "https://qz.com/india/1508340/indias-new-e-commerce-fdi-rules-may-hurt-amazon-flipkart/"> Tell Quartz in a comment.
The new regulation is widely seen as a response to the concerns of smaller vendors, who feel marginalized and weak compared to large organizations. Now, with capital-intensive policies such as discounts, exclusive sales relationships and strategic investment on the table, smaller players will get a foothold and can do more e-commerce, Conal Bahl, Chief Executive Officer Snapdeal – an e-commerce company that competed in the past with Fleckart and Amazon.
Will become a completely different year for e-commerce in India in 2019.