Yes, you read it right. No more heavy discounts from Indian e-Commerce companies including the industry giants Amazon and Flipkart. Your dream run of getting heavy discounts from Amazon and Flipkart on your favorite brands and products is all set to come to an end.
The government of India announced changes to the policy of foreign direct investment for e-Commerce industry on 26th December 2018. All the e-companies companies especially the ones who offer big discounts have to alter their business strategies to meet these policies.
Walmart, which invested almost $16 billion to acquire Flipkart would have received a jolt with this news.
These changes will be effective from 1st February 2019. Grab Discounts Here before they are gone.
Let’s read more to understand how you and the companies will be affected with this new change.
1. Reason for the new Policy
According to a senior government official, this decision was taken after they received numerous complaints from the retailers on the e-commerce platforms violating the norms to offer discounts in logistics and wholesale.
He told that the decision was taken after a careful analysis of the complaints and various aspects like the selling history, promotions, investments, partnerships etc.
With these new guidelines, there will no discrimination among the vendors as some vendors offer deep discounts because of their association with Flipkart and Amazon India.
2. Goodbye Cash Back Schemes
The government also restrict deep discounting and cash back schemes which are one of the major strategies to attract online buyers.
This step was taken as there were multiple complaints from the offline retailers citing the absence of a level playing field in the sector.
“Cashback given by the online organizations of the commercial center element to purchasers will be reasonable and non-prejudicial,” the notice said.
Cash back provided by the group companies of marketplace entity to buyers shall be fair and non-discriminatory.
3. Fewer exclusive launches on Flipkart and Amazon
Currently, lot of companies are making their products available only on certain e-commerce websites. For example MI launches their products exclusively on Flipkart.
This has to be changed as per the new policy as the vendors can’t put more than 25% of their inventory or launches only on one e-commerce platform/marketplace.
4. Number of Sales will Come Down
It is likely that the number of sales on the e-commerce websites will drop down as these big companies are being forced to follow the above mentioned rules.
5. No more ‘Flipkart Assured’ or ‘Amazon Fulfilled’ Programmes
Flipkart or Amazon won’t be allowed to sell the products of the companies if they have stake or control in any of the brands selling on their platform.
6. No more Free Deliveries
The e-commerce giants have offered free deliveries as they have their logistics in place. Now, they cannot operate free of cost if they have their own logistics company.
7. Big Boost for Offline Retailers
This news will give a massive boost for the offline retailers and shopkeepers who have been complaining about the unfair advantage the e-Commerce companies have.
8. Annual Report to be Provided to RBI
These companies will have to file a certificate along with a report of statutory auditor to the RBI by 30th September of every year for the previous financial year.
As per the current policy, 100% FDI is permitted in marketplace e-commerce activities but prohibited in inventory-based activities.
The companies had offered huge discounts until now to make people used to online shopping although they have been incurring huge losses for years. I believe that this will have a great impact on their operating margins and hence discounts to the customers.
What do you think about this new change? Please comment below.