A Blow to E-Commerce Majors!!
E-commerce now-a-days has acquired a supreme convenience in routine life, known as heart of national economy as well as known for its second most user availability after Social media platforms.
Ecommerce is an foremost profit driver of any business body and its importance and presence no need introduction. It has undoubtedly moved the world in the next zone.
But a recent implication of new policies has led many imparities in the balancing bars on the E-commerce tables. The Indian government on December 26 has barred the online retailers to deal in products of the companies in which they hold their stake and prohibited the companies on undertaking any exclusive transaction for the merchandise, unveiling norms also concluded the upend of $18 billion industry of India.
Barrier in selling the merchandise of the companies in which the E-commerce marketplaces owns stake blows a major impact on AMAZON in particular as the firm has several such joint ventures, including Cloudtail and Appario. (Cloudtail is a joint venture between Amazon and Infosys co-founder N.R. Narayana Murthy’s Catamaran Ventures).
The commerce and industry ministry’s thought to process the new norms follows complaints by small traders, who argue that deep discounts offered by the likes of Amazon and Flipkart are driving concerns out of business competition. The implementation is also crucial necessary for the ruling Bhartiya janta party (BJP), given that national election are due by May and traders are core voter base for building up the empire.
This is not the only jolt out of the blue. The move to ban exclusive deals for products will also hit the major online retailers such as Flipkart and Amazon. Flipkart, for instance, has exclusive association with top smartphone brand like Xiaomi and Oppo. Smartphones contributes to over 50% of overall e-commerce Sales Revenue in India.
A senior authorized official confirm the changes in the foreign direct investment policy (FDI) on e-commerce were aimed at tackling “anti-competitive” behavior by e-commerce entities. “There is a wrongful subsidization of products by e-commerce players. In the marketplace model, the e-commerce entity should be neutral to all vendors,” assert the official.
E-commerce companies have to turnaround to the drawing board and analyze if their particular business models comply with the new requirements which are coming into force prospectively from February 1.
Also Read: E-commerce in India
Why is it evoking protests from companies?
A statement was circulated for the E-commerce retailer by the ministry that:-
“An entity having equity participation by e-commerce marketplace entity 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,”
The revised norms targets to protect the interest of domestic players, who have to tackle difficult sort of things and relatively tough competition from online-retailers having deep pockets enriched by foreign investors, the Ministry said. The policy would be effective from February 2019. “The move would completely prevent influencing prices by e-commerce players. This will also ensure better enforcement of FDI guidelines in e-commerce companies,”
The policy frames a point that vendor will not be permitted to trade with more than 25% of its commodities on an online platform of a single E-marketplace firm. “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. “An entity having equity participation by e-commerce marketplace entity 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.” Claims the statement.
WHAT IS A GREAT WORRY??
According to Bejon Mishra, founder, Consumer Online Foundation (a consumer protection activists’ agency), once the new Bill gets enacted by the Rajya Sabha, it would be purely new manifestation. “Earlier a person could go to the consumer court only when s/he faced a challenging situation and or suffered from buying a product or availing a service. Now, there can be a suo motu case taken on any defective, substandard product or service provided in the marketplace by anybody,” pens Mishra.
Now, the picture is to be looked at how the company deals with the formulations and their movement with new bill amendments.
This is a major disruption to the E-COMMERCE of Indian economy, however a great step toward offline traders who are facing backlash of the Major association. So hope for the best !!