The two largest players in India’s e-commerce sector – Flipkart and Amazon have allegedly put aside their differences and joined forces to tackle a larger problem – the Government’s revamped e-commerce rules.
According to a report by Business Standard, the two companies are looking towards Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce & Industry (Ficci) for help. Even investment giants such as SoftBank, Tiger Global, Sequoia, and Naspers are said to have allied along with Flipkart and Amazon.
The new e-commerce rules place several obstacles in the operations of these companies. According to these new rules, online retailers are restrained from selling products exclusively on their websites and are also barred from selling products of the companies in which they have stakes. Apart from this, the government also placed severe restrictions over the “cashbacks” offered by these websites, which has been a highly lucrative segment of their sales so far.
Unnamed source, Business Standard.
“There is tangible fear that the government might make a policy that makes it unviable for Amazon and Flipkart to continue business in India. They will have to completely revamp the way they work and whatever they have achieved in the country till now would all dial back to zero. The sector is now planning to take the help of industry bodies such as CII and Ficci, as approaching the government via them would be much smoother,”
Industry pundits believe these companies are being singled out unnecessarily. Arvind Singhal, Chairman of Technopak Advisors, maintains that owning private labels has been practiced by retailers – online and offline alike, for many years and that its a perfectly legitimate business. Moreover, since it isn’t publicly run, online sellers have every right to have a run with their business plans.
Anonymous top-level Amazon Executive; reported by Livemint
“This policy makes no sense and is utterly ridiculous. The way this new policy has been crafted shows a complete lack of understanding of the retail landscape in India and how it functions. We were not even consulted before this was issued,”
The companies also believe that if their private labels were to shut down, it would directly impact the jobs of many people involve and also curtail their plans to expand in the country.
Many feel that the Indian Government is taking a populist stance due to the looming elections. It might seem like the ruling government is trying to get into the good books of the offline traders with this new policy, as they constitute a significant chunk of their voter base.