No Private Labels, Exclusive Deals, Deep Discounts On E-Commerce Sites

Daniel Fowler
December 28, 2018

The online retail firms (e-commerce marketplace entity) are also prohibited from mandating any company to sell its products exclusively on its platform only, as per the revised policy on FDI in e-commerce which comes into effect from February 1, 2019.

The new rules will start on February 1 when the nationalist government of Prime Minister Narendra Modi announces its interim budget ahead of general elections due by May.

According to the current policy, 100 per cent FDI is permitted in marketplace e-commerce activities.

In response to an inquiry from Bloomberg, Walmart's Flipkart unit said e-commerce has the potential to create millions of jobs for India and any policy changes will have "long-term implications in the evolution of the promising sector". The Chinese e-commerce behemoth Alibaba doesn't fight shy of proclaiming that it is following the inventory model.

As DIPP regulations do not allow for this, it suits Amazon to enter into JVs with larger players to help it expand aggressively and give it more control over its inventory and sellers, which will translate into better margins and customer experience.

Underlining the contribution of the Indian e-commerce industry in transforming how consumers connect with sellers and local manufacturers, Flipkart said the sector has also provided tremendous value to the country and spawned new jobs.

Delhi acts in response to complaints from brick and mortar retailers. They have been complaining that e-commerce firms have been indirectly influencing the retail market with selective discounts and incentives dished out through vendors, who are related parties. This will no doubt come as a massive blow for both companies and e-commerce platforms.

Govt Restricts Ecommerce Cos From Influencing Products Sale Price

The government has issued a directive that will put a stop to e-commerce platforms like Amazon and Flipkart from selling their own goods. "These changes will enable a level playing field for all sellers", he tweeted.

But the 2016 guideline failed to check incest, i.e. selling its own products substantially. For instance, Amazon holds stakes in Cloudtail India and Appario Retail and will not be able to sell their wares. However, what Amazon and Flipkart were doing in India was became a major threat to offline retailers and that necessitated the government intervention. In any case even the 25 percent leeway is too much.

Representatives for Amazon and Flipkart in India declined to comment on the new rules, saying the companies were still assessing them. This is as it should be. "They (online marketplaces) can't build brands now", Biyani told the Economic Times.

When NDTV pointed out that the clarifications, in absence of an empowered body to check violations might defeat the objective, the sources in the ministry of commerce said, "The government will consider if there is a need for a separate regulator for e-commerce". This may directly impact, if not shut down, Amazon Basics by Amazon, Perfect Homes, MarQ and others by Flipkart as well as several other self-owned brands hawked by e-commerce platforms. But then the ban is not on flash sales per se.

Soon, mobile phone companies might not be able to run exclusive flash sales on e-commerce portals.

Every year in the month of September, these firms have to file a certificate along with a report of a statutory auditor to the RBI to confirm they are complying with the guidelines. "Prices will go up as discounts evaporate, and product options and availability may contract as e-commerce marketplaces strive to remain compliant with the new rules".

Michelle Obama Voted Most Admired Woman in America
Republicans chose Trump (9 percent), followed by Obama and Winfrey at 5 percent, and Hillary Clinton at less than 0.5 percent. Ambassador to the United Nations Nikki Haley, and House Minority Leader Nancy Pelosi rounded off the top 10.

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