New norms may freeze Flipkart, Amazon models


6pack

Well-Known Member
ex-Mod
Sep 19, 2005
7,557
1,544
302
Source: https://economictimes.indiatimes.com/small-biz/policy-trends/new-norms-may-freeze-flipkart-amazon-models/articleshow/67266183.cms?utm_source=ETTopNews&utm_medium=HPTN&utm_campaign=AL1&utm_content=23


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.
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.
 

Lord Nemesis

Overlord
Veteran
Jun 3, 2005
5,936
2,407
377
They found a nice way to kill of a vast majority of small businesses that operate exclusively on online marketplaces.
 
  • Like
Reactions: mh09ad5578

6pack

Well-Known Member
ex-Mod
Sep 19, 2005
7,557
1,544
302
Exactly. 25% limit on one e-tailer is like doom for small businesses. Now they will have to spend money to list in 4 different sites and that will mean 3-4 times increased listing fees, stocking fees, shipping fees etc. If there are no 4 or more good e-selling sites then he will be in loss in 2 or more sites always.

The govt has removed the floor and kicked the small business owners in their stomachs too. Some dumb ass in govt must have just blindly signed this idea which another dumb ass in the greedy brick and mortar association came up with. Idiots in the govt keep on falling to a new low each passing day.
 

Lord Nemesis

Overlord
Veteran
Jun 3, 2005
5,936
2,407
377
Relax, Its election time. Mudizi needs muny to run in elections. A few big muny filled suitcases from Amazon & Walmart are long due.
More like the retail lobby. They have been at it for quite a while.

Just for the record, there are few other things at stake here along with this.

1. Discounts and cash backs by e-com platforms are being deemed unlawful.
2. e-com companies can no longer give free shipping through their subsidiary logistics services.
3. Faster/priority shipping options under programs like Amazon Prime subscription are being deemed discriminatory and to be done away with.
 

Michael Simeonovitch

Just another poor guy
Veteran
Jul 17, 2012
1,046
598
151
Exactly. 25% limit on one e-tailer is like doom for small businesses. Now they will have to spend money to list in 4 different sites and that will mean 3-4 times increased listing fees, stocking fees, shipping fees etc. If there are no 4 or more good e-selling sites then he will be in loss in 2 or more sites always.
Disagree.

A small retailer, who has a shop can get away with fudging his books of business.

Only people like cloudtail who dont even have a shop will suffer.

This will actually work out good for the offline-online retailers.[DOUBLEPOST=1545978851][/DOUBLEPOST]
BJP has got the highest amount of money in election bonds according to ECI. So his party already got hundreds of crores of rupees.
Yeah, he doesnt realize not every party is a party of beggars.
 

Julian

om nom nom
Veteran
Jul 31, 2008
1,829
718
201
37
Navi Mumbai
The retail industry has been suffering losses for a while now, and partly due to the big online portals. However this hasn't stopped Reliance Digital from opening a big new store near where a live just a couple months ago. 2+2=...
 
  • Like
Reactions: mh09ad5578

Mr.J

Well-Known Member
Adept
Oct 26, 2010
916
650
132
30
Mumbai
I wanna talk about ending exclusive deals. This is both good and bad. The Phone companies can't make deals with single website for their phones. But it also restricts freedom of people to do their business. What if someone (not just big companies but hobbyists and small businesses) prefers to sell only through Amazon or Flipkart or some other website for whatever reason, it puts restrictions on them. It's micromanagement which market doesn't like or want.
 

Lord Nemesis

Overlord
Veteran
Jun 3, 2005
5,936
2,407
377
Disagree.

A small retailer, who has a shop can get away with fudging his books of business.

Only people like cloudtail who dont even have a shop will suffer.

This will actually work out good for the offline-online retailers.
Many of the small and cottage industry type businesses that are on Flipkart or amazon don't have a physical store at all and can't afford to have them. They exist and thrive on e-com platforms exclusively and operate in a tax compliant manner. Such businesses will more than likely will shut down if not for e-com marketplaces. Secondly, If you are saying that retailers that do have stores would be driven towards tax fraud, then I don't see why its a good thing at all in general. Everyone that sells on e-com marketplaces need to have GST registration and forced to be tax compliant for the most part and this is going to change that. So,what do we end up with?

1. Online only small scale and cottage businesses will be ruined
2. Retailers with offline business would be driven towards tax fraud
3. Large offline retailers will get back monopolistic position and can dictate and control the market.
4. Consumers get fleeced from all sides.
 
  • Like
Reactions: mh09ad5578

Michael Simeonovitch

Just another poor guy
Veteran
Jul 17, 2012
1,046
598
151
Many of the small and cottage industry type businesses that are on Flipkart or amazon don't have a physical store at all and can't afford to have them. They exist and thrive on e-com platforms exclusively and operate in a tax compliant manner. Such businesses will more than likely will shut down if not for e-com marketplaces. Secondly, If you are saying that retailers that do have stores would be driven towards tax fraud, then I don't see why its a good thing at all in general. Everyone that sells on e-com marketplaces need to have GST registration and forced to be tax compliant for the most part and this is going to change that. So,what do we end up with?

1. Online only small scale and cottage businesses will be ruined
2. Retailers with offline business would be driven towards tax fraud
3. Large offline retailers will get back monopolistic position and can dictate and control the market.
4. Consumers get fleeced from all sides.

I was browsing amazon for Note 9 the other day, and saw an amazon prime fulfilled offer by a seller called Samsung World Bhopal (dont remember exact).

So, for such sellers, which have a shop, and online presence, it is a boom, no?



I think this will enable more offline sellers to come online, rather than vice versa.
 

blr_p

Well-Known Member
Veteran
Apr 11, 2007
6,058
1,288
301
The retail industry has been suffering losses for a while now, and partly due to the big online portals. However this hasn't stopped Reliance Digital from opening a big new store near where a live just a couple months ago. 2+2=...
big online portals are part of the retail industry.

The retail industry along with restaurants, hotels & 3rd party travel services are posting very good growth rates and this is after taking inflation into account.
 

blr_p

Well-Known Member
Veteran
Apr 11, 2007
6,058
1,288
301
I wanna talk about ending exclusive deals. This is both good and bad. The Phone companies can't make deals with single website for their phones. But it also restricts freedom of people to do their business. What if someone (not just big companies but hobbyists and small businesses) prefers to sell only through Amazon or Flipkart or some other website for whatever reason, it puts restrictions on them. It's micromanagement which market doesn't like or want.
its self contradictory isn't it. Insisting on ending exclusive deals interferes with the natural rhythm of the market. It' like redistribution. Everybody now should get a fair share.[DOUBLEPOST=1546013513][/DOUBLEPOST]
They found a nice way to kill of a vast majority of small businesses that operate exclusively on online marketplaces.
Those small business are a vocal votebank. Given they comprise the bulk of Indian services i think something isn't correct here as to the reading of the intent of this move.

Already quite a few ideas have been floated about so far in this discussion and i'm not too sure which one is correct. This will time to understand better.
 

adventureguy

Well-Known Member
Veteran
Nov 16, 2015
1,208
554
126
Hyderabad
its self contradictory isn't it. Insisting on ending exclusive deals interferes with the natural rhythm of the market. It' like redistribution. Everybody now should get a fair share.[DOUBLEPOST=1546013513][/DOUBLEPOST]
you just described socialism, comrade. This is a stupid move, ending exclusives.
 
  • Like
Reactions: mh09ad5578

adventureguy

Well-Known Member
Veteran
Nov 16, 2015
1,208
554
126
Hyderabad
I have a few friends who sell on sites. Amazon and flipkart used them to get traction early but once customers began coming regularly, they started directing traffic to their own sellers (cloudtail etc) and started giving bullshit reasons to take money and also started charging more money to deliver stuff. Obviously they can't compete with deep discounts being offered by these big amazons/flipkarts. so they fear that india will turn into another USA where mom and pop stores disappear and retail is dominated by walmart.

already amazon has been trying to get a foot into the offline retail by buying up a stake in big bazaar and walmart already has good wholesale stores. and amazon already started grocery delivery in few metros and already many local kirana stores are buying goods directly from amazon pantry. This may seem unthinkable but in half a decade or decade, offline market will entirely be dominated by these MNCs.

local shop kiranas are good vote banks so political parties are trying to save them. already there has been many protests against amazon/flipkart by trader associations.
 

adventureguy

Well-Known Member
Veteran
Nov 16, 2015
1,208
554
126
Hyderabad
I think this will enable more offline sellers to come online, rather than vice versa.
Even if more offline sellers come online, it will be pointless as they can't compete on price with these cloudtail seller. They have to take into account the cut flipkart/amazon takes on fullfilling each order and it will make products costlier (or rather, their true market price)

A fridge costs 20k at local distributer plus 200~300rs for shipping and same fridge costs 18k online with free delivery. no was the same distributer can come online and sustain his business.
 

Julian

om nom nom
Veteran
Jul 31, 2008
1,829
718
201
37
Navi Mumbai
What's more important, the welfare of the seller (offline or whatever) or of the consumer?

Also, does anyone know the margins of consumer electronics at every point in the supply chain?
 
  • Like
Reactions: mh09ad5578

Lord Nemesis

Overlord
Veteran
Jun 3, 2005
5,936
2,407
377
What's more important, the welfare of the seller (offline or whatever) or of the consumer?
The welfare of both the seller and consumer is important. The system should be fair to all. Consumers should get the products at fair prices, business owners both big and small should be able to get fair margins on their sales. The problem is that such a balance doesn't exist and these new rules would only help skew the advantage steeply towards large businesses run by local billionaires. Obviously, it makes sense for political parties since that is where they will get their funds from.
 

Emperor

Well-Known Member
Adept
Jan 12, 2006
3,385
80
137
Always don't think that ecommerce provides good discount.

Last month bought Cello Water Bottle from xxxx, found it low price compare to offline retail store, was happy to buy 3 and once it arrived, on close look I found it was FACTORY SECONDS... which is easily available at 50% of MRP while I pay 70% of MRP .....

Last week wish to buy Mobile cover which again was at online for Rs.140 + shipping, while from local store bought same for Rs.80/-

Also various time found GOOD DEAL for ... EOL, Near To Expiry, Factory Seconds products online.

Once the retail sector shut down or erased or reduced to nil than, we don't know what DEAL Indian Buyers will get from these Ecommerce giant who are making upto 2000 Crores loss each year from Indian subsidiary.

Don't ever think that they are making loss to make Indian Retail Buyers Happy or giving back to Indian Society.
 
Last edited: