- Sep 19, 2005
So will we see lots of discounts and clearing sales now till Jan end from these sellers? And even more price increases by other sellers probably now that there is no competition to them from the deep pockets of Amazon and Flipkart. I think this will kill online retail for many shops since they will have to pay larger fees to these online market places and wont get as many sales since their prices will be higher than brick and mortar stores due to increase in shipping.Big affiliated sellers on India’s largest online retail platforms like Amazon India and Flipkart, who control about 80% of the etail market in India, will take a significant hit with Press Note 3 guidelines putting a freeze on the way business model of these companies operate.
Big sellers like RetailNet, Super-ComNet and OmniTech Retail on Flipkart and its fashion affiliate Myntra besides Cloudtail and Appario on Amazon India form over 60% of these platforms’ sales. “Inventory of a vendor will be deemed to be controlled by ecommerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies,” said the updated Press Note 3.
All these entities sell exclusively on Flipkart and Amazon India, which would mean they will have to quickly find 75% of their business with other platforms or retailers to continue operating, said the founder of an online retailer who did not wish to be named. “They have virtually made Cloudtail non-existent. Millions of Indian retailers are going to benefit and it will create a level playing field,” said this founder.
The new rules, which come into effect from February 2019, will effectively drop the axe on seller entities Cloudtail and Appario which have equity investment from Amazon through a step-down unit, barring them from selling on the platform.
“This will effectively stop Cloudtail (on Amazon) and RetailNet (on Flipkart),” said an executive of an ecommerce company, who did not wish to be named.
“It will impact the multiple structuring of ecommerce companies. Amazon in particular, will need to change the equity structure in Cloudtail and Appario,” a legal expert said.