eCommerce in India Faces Sweeping Policy Changes


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Exclusive No More!

For a long time, online eCommerce companies have been able to use exclusive product deals to bring customers to their virtual store shelves. Much like you can only find a copy of “Super Mario Bros.” on a Nintendo system you’d only be able to find specific brands on Amazon.com and not Walmart.com. That is about to change. Amazon relies a lot on the revenue that the Indian eCommerce market rakes in. To put in perspective: India’s eCommerce market brings Amazon $35 billion yearly at the moment. However, that number is expected to rise to $100 billion by 2022. That aforementioned changes might make that glorious triple-digit number a little harder to achieve, however. A change to India’s policy for foreign direct investment has seemed to almost end things such as discounts, exclusive sales, and more.

 

The new policy is going to go live on February 1. The first, and most impactful, change to eCommerce is a ban on exclusive sales. Gone are the days of being able to find a product on Amazon and only Amazon in India. Additionally, by bringing in competition this gives more opportunity to have agency in their product selection.

The Takeaways

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The next change outlaws retailers selling products on platforms they count as investors. In layman’s terms, Amazon, for example, can’t work with companies such as Xiaomi since that company invests in Amazon. The same thing applies vice versa. The first two policies are pretty gutting for any eCommerce company in India. They are clear ways of reducing the level of power Amazon has in the country over its competitors. The final change to the policy is a little less import. It places restrictions on a number of discounts, as well as, cashback.

Policy

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According to the policy “E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field… Cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory.” This almost completely removes the appeal of buying online for a better deal.

Leaders in India are open about their intent with these changes. They’re meant to kill competition and get rid of the ways eCommerce retailers can differentiate themselves from traditional brick and mortar. Whereas the large eCommerce giants are “saddened” by this news, smaller brands are rejoicing. 2019 is going to be a year of new highs and lows for Indian eCommerce.

 

For updates on this and more follow our blog or contact Sunship for more detailed e-commerce information.

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