Govt tightens e-comm policy to check misuse by online players

Govt tightens e-comm policy to check misuse by online players

"Also, models designed specifically for sale on e-commerce platforms by companies and barring sellers from selling on other platforms has been done away with", he added. The new rules will be applicable from 1 February.

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". It made it clear that 100 percent FDI under the automatic approval category is on only if marketplace model was followed as opposed to the inventory model. "These clarifications will have a major impact on the major e-commerce players since a lot of them primarily source goods from sellers who are primarily relevant to such e-commerce players". The Chinese e-commerce behemoth Alibaba doesn't fight shy of proclaiming that it is following the inventory model.

Also, e-commerce players like Amazon and Flipkart, who have their private labels, will not be able to sell them on their platforms if they hold equity in the company manufacturing them.

The government on Wednesday introduced changes to foreign direct investment rules, banning e-commerce players from selling products from entities in which they have an equity interest, a move the source said was aimed at preventing anti-competitive practices.

If strictly interpreted, India's new e-commerce policies could force significant strategy changes for the two US retail giants. It should neither control the inventory nor influence the price. "Going forward, suppliers will not be permitted to sell their products on the platform run by such marketplace entity".

Govt Restricts Ecommerce Cos From Influencing Products Sale Price

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. Among the largest sellers on the Amazon India online platform, Cloudtail reported revenue of ₹7,149.21 revenue for the financial year 2017-2018. Now, all such exclusive agreements with important sellers such as RetailNet, Super-ComNet, and OmniTech Retail will be rendered null and void.

Sakshi Batra gets in conversation with Shreya Nandi to find out by when will the new norms come into effect and who will be the big gainers.

How can we say while abuse is bad, we will tolerate it so long as such abuse doesn't cross the 25 percent limit? "Inventory of a vendor will be deemed to be controlled by ecommerce marketplace entity if more than 25 per cent of purchases of such vendor are from the marketplace entity or its group companies", it said. This means that a company like OnePlus will not be able to sell its phone exclusively on Amazon's platform. Such short duration sales make a mockery of the claim of marketplace besides bringing the website crashing down in view of the extreme pressure put on it by the online buyers falling over themselves.

Commenting on the government's revised norms, Kumar Rajagopalan, CEO, Retailers Association of India, said, "The current clarification clearly bars the marketplace e-commerce entities from influencing price and creates a level playing field for sellers". This will impact backend operations, as Group entities would have to be removed from the e-commerce value chain.

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