{"id":112,"date":"2018-12-27T09:30:03","date_gmt":"2018-12-27T09:30:03","guid":{"rendered":"http:\/\/surfshields.com\/index.php\/2018\/12\/27\/new-e-commerce-restrictions-in-india-just-ruined-christmas-for-amazon-and-walmart\/"},"modified":"2018-12-27T09:30:03","modified_gmt":"2018-12-27T09:30:03","slug":"new-e-commerce-restrictions-in-india-just-ruined-christmas-for-amazon-and-walmart","status":"publish","type":"post","link":"https:\/\/surfshields.com\/index.php\/2018\/12\/27\/new-e-commerce-restrictions-in-india-just-ruined-christmas-for-amazon-and-walmart\/","title":{"rendered":"New e-commerce restrictions in India just ruined Christmas for Amazon and Walmart"},"content":{"rendered":"
\n

The Indian government is playing the role of festive party pooper for Walmart <\/span><\/a> and Amazon after it announced new regulations that look set to impede the U.S. duo\u2019s efforts to grow their businesses in India.<\/p>\n

Online commerce in the country is tipped to surpass $100 billion per year by 2022 up from $35 billion today as more Indians come online,\u00a0according to a report co-authored by PwC<\/a>. But 2019 could be a very different year after an update to the country\u2019s policy for foreign direct investment<\/a> (FDI) appeared to end the practice of discounts, exclusive sales and more.<\/p>\n

The three main takeaways from the new policy, which will go live on February 1, are a ban on exclusive sales, the outlawing of retailers selling products on platforms they count as investors, and\u00a0restrictions on discounts and cashback.<\/p>\n

Those first two clauses are pretty clear\u00a0and will have a\u00a0significant impact on Amazon <\/span><\/a> \u2014 which has pumped some $5 billion into India \u2014 and Walmart, which\u00a0forked out $16 billion to buy India-based Flipkart<\/a>.<\/p>\n

Both online retailers have been able to make a splash by tying up with brands for exclusive online sales, particularly in the smartphone space where, for example, Amazon has worked with Xiaomi <\/span><\/a> and Flipkart <\/span><\/a> has collaborated with Oppo. The new guideline would appear to end that practice, while adding further restrictions to complicate relationships with vendors.\u00a0From February, brands will be forbidden from selling more than 25 percent of their sales via any single e-commerce marketplace.<\/p>\n

\n\"\"<\/p>\n

Walmart bought Flipkart for $16 billion, but already both founders of the Indian company have left [Photo by AFP\/Getty Images]<\/p>\n<\/div>\n

Beyond restricting companies like Oppo \u2014 Xiaomi prioritizes its own Mi.com site for sales \u2014 that 25 percent ruling is a headache for Amazon, which operates a number of joint ventures with Indian retailers. Those JVs were designed to circumvent
\na 2016 ruling<\/a> that prevented foreign e-commerce businesses from owning inventory, but now they seem outlawed.<\/p>\n

Cloudtail India (a 49:51 JV between Amazon and Catamaran Ventures) <\/span><\/a> is Amazon\u2019s biggest seller while another major one is Appario Retail, a collaboration with Patni Group. Together, both sell more than 25 percent of product on Amazon, use exclusive deals and are part-owned by Amazon. That\u2019s three strikes.<\/p>\n

Those rules will have Amazon and Walmart-Flipkart <\/span><\/a> working to find alternatives, but there\u2019s more with restrictions on discounts and cashback offers, which could massively cramp the appeal of online commerce, which has been to undercut brick and mortar retailers with heavy subsidies.<\/p>\n

Here\u2019s the relevant part of the note:<\/p>\n

\n

E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field\u2026<\/p>\n

Cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory.<\/p>\n<\/blockquote>\n

Exactly what constitutes a \u201clevel playing field\u201d or \u201cfair\u201d may be open to interpretation, but clearly this update gives offline retailers a route to protest pricing on online retail sites.<\/p>\n

The first thought is that these new updates are focused on the core business model tenants that make e-commerce what it is today.<\/p>\n

\u201cIt will kill competition and there will be nothing for online retailers to differentiate on,\u201d Amarjeet Singh, a partner at KPMG,<\/a><\/a> href=”https:\/\/qz.com\/india\/1508340\/indias-new-e-commerce-fdi-rules-may-hurt-amazon-flipkart\/”> told Quartz in a comment.<\/p>\n

The new regulation is widely seen as a response to concerns from smaller sellers, who feel marginalized and powerless compared to larger organizations. Now, with capital-intensive policies such as discounts, exclusive sales relationships and strategic investment off the table, smaller players will gain a foothold and be able to do more from e-commerce, that\u2019s according to Kunal Bahl, <\/span><\/a> CEO of Snapdeal <\/span><\/a> \u2014 a niche e-commerce firm that once competed head-to-head with Flipkart and Amazon.<\/p>\n

It\u2019s shaping up to be a very different year for e-commerce in India in 2019.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

https:\/\/techcrunch.com\/2018\/12\/27\/amazon-walmart-india-e-commerce-restrictions\/<\/p>\n","protected":false},"author":0,"featured_media":113,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-112","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/surfshields.com\/index.php\/wp-json\/wp\/v2\/posts\/112","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/surfshields.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/surfshields.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/surfshields.com\/index.php\/wp-json\/wp\/v2\/comments?post=112"}],"version-history":[{"count":0,"href":"https:\/\/surfshields.com\/index.php\/wp-json\/wp\/v2\/posts\/112\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/surfshields.com\/index.php\/wp-json\/wp\/v2\/media\/113"}],"wp:attachment":[{"href":"https:\/\/surfshields.com\/index.php\/wp-json\/wp\/v2\/media?parent=112"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/surfshields.com\/index.php\/wp-json\/wp\/v2\/categories?post=112"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/surfshields.com\/index.php\/wp-json\/wp\/v2\/tags?post=112"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}