New norms may freeze Flipkart, Amazon models

Discussion in 'Latest Technology News' started by 6pack, Dec 27, 2018.

  1. blr_p

    blr_p Well-Known Member
    Veteran

    I see I took it as sales volume.

    Sellers like cloudtail & Appario amounting to 25% or more of amazon's sales ?

    Otherwise this move is targeting online sales.

    In effect its limiting inventory of online sales to be just 25% ? seems a bit small.

    It's pro bricks and mortar in other words
     
  2. AMG

    AMG Just another poor guy
    Veteran

    Not Amazon's sales.
    Their own sales.

    Lets say Cloudtail decides to open showrooms, like lenskart, but still cant get their offline sales to over 75%.
    They will still continue to be an vendor owned company.

    For them to escape this law, the govt want cloudtail to open brick and mortar shops (thus hire people), and sell atleast 75% of their total volumes through such shops.
     
  3. blr_p

    blr_p Well-Known Member
    Veteran

    ok, we're clear now.

    What if its just an election ploy, from the zdnet article

    This rule pretty much spells the end for online sales. We're going to turn the clock back to before flipkart & amazon ? really ?

    Amazon invested $2bn in India less than six months ago. All gone for a toss ? hmm...
     
  4. rdst_1

    rdst_1 Well-Known Member
    Veteran

    This 25% limit is actually the most problematic clause. Because it doesn't make any sense and is detrimental to so many small startups, as others have pointed out, who sell only through online portals and use warehouse services provided by Amazon.
    The thing is, that the protestors had a valid point that they have raised. Any e-commerce platform with controlling power of an Indian company and the rest as FDI can function both as a marketplace and a vendor. But any e-commerce company in which a foreign company has controlling interest has to function as just a marketplace. The people investing whether it is Amazon or Walmart knew that before they decided to invest in India.

    I have heard that many small startups in the US, actually prefer to sell through their own website instead of Amazon and slowly guide the customers to their own sites. I am guessing small sellers in India will have to do the same thing. It would mean more expenses on SEO and Facebook ads. Some might not survive the transition.
     
  5. blr_p

    blr_p Well-Known Member
    Veteran

    I'm coming to the conclusion the customer is no longer the king but rather it is the shareholder.

    Consider the anti-customer practice that Apple is pioneering. Got rid of the headphone jack. Why ? because now you have to buy a BT headset and that means a windfall for partners in that space. They broke an cross industry wide standard and you have to pay extra to fix it. Now this could have remained an Apple only thing except companies were only too happy to jump on the bandwagon once they saw the push back wasn't as bad as thought.
     
    #45 blr_p, Dec 30, 2018
    Last edited: Dec 30, 2018
    Julian likes this.
  6. blr_p

    blr_p Well-Known Member
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    They usually have better prices on those websites than amazon too. Some things i used to get off amazon US no longer sell there any longer. It makes looking for things harder as you have to go digging for these products scattered all over the place. It makes buying harder as well as where are the user reviews for products sold on these sites. Non existent.
     
    #46 blr_p, Dec 30, 2018
    Last edited: Dec 30, 2018
  7. blr_p

    blr_p Well-Known Member
    Veteran

    How to explain this comment by the snapdeal founder ?

    https://www.livemint.com/Industry/R...-Amazon-as-govt-tightens-ecommerce-norms.html

    If this ruling affects small as well as larger online sellers. In what way does this ruling help leverage the reach of e-commerce. It is patently anti-ecommerce.

    Some thing tells me there are going to be amendments and this rule supposedly coming into force on Feb 1 might be amended. For now its a trial balloon.

     
  8. rdst_1

    rdst_1 Well-Known Member
    Veteran

    The 25% rule makes no sense, because as a vendor, even if I list on 4-5 e-commerce platforms as well as sell through my own site or through B&M stores, there is no guarantee that sales will be divided equally through all channels. It all depends on the comfort of the customer and where he chooses to shop. Don't see how the policy makers could overlook such simple absurdity when they decided on such a restriction.
     
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  9. rdst_1

    rdst_1 Well-Known Member
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    He is definitely being short-sighted. Snapdeal will benefit in the short run, but as you have pointed out, the policy is actually anti e-commerce. Guess he is happy enough with his small win.
     
    Julian likes this.
  10. AMG

    AMG Just another poor guy
    Veteran

    Snapdeal (3rd class website, BTW. Second ChorClues) doesnt have any own sellers (like WSRetail or Cloudtail), does it?

    Ofcourse, they lose nothing, and enemy's loss is my gain.
     
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  11. Lord Nemesis

    Lord Nemesis Overlord
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    The govt doesn't want them to open B&M stores and in fact doesn't allow them to open stores even if they are willing. Any entity in which these companies have a stake directly or indirectly are outright banned from doing business. The 25% rule only applies to third party companies selling on these marketplaces. As I said, this is meant to be a trap to cripple their business. They won't be allowed to have exclusive sellers (even third party), free or priority shipping and Amazon Fulfilled/Flipkart Assured which will virtually cripple their business while a local player like reliance will be able to quickly build their market using the same.

    This is why I always maintain that India is not a good place for any kind of business investment. Even the potential market due to over population does not justify it.
     
  12. adventureguy

    adventureguy Well-Known Member
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    I don't get the 25% rule either tbh. whole rule is a cluster**** and different newspaper has different information
     
  13. AMG

    AMG Just another poor guy
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    What law stops cloudtail from opening a brick and mortar shop?
     
  14. Julian

    Julian om nom nom
    Veteran

    Bingo!

    Also, about Apple, yes everybody else is emulating them in not hesitating to screw customers over to increase their bottom line. But the funny thing is Apple is also emulating them in that they've gone from a new phone model every year or couple years to multiple models every year. Their development cycle is almost like all the rest now.
     
  15. rdst_1

    rdst_1 Well-Known Member
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    I don't think we have yet allowed FDI in retail sales yet, so Cloudtail can't open a B&M store even if they wanted to. Even the Bharti-Walmart venture was only allowed to open B2B stores. Same is the case with Metro. FDI is only allowed for B2B sales for now.

    Also, the B&M protestors are now putting more and more pressure on manufacturers. Just read a news that most B&M stores and chains in south have decided and declared that they won't stock and sell any Bosch and Seimens products because of the sales they had on e-commerce platforms during Diwali and earlier. This, when Bosch has recently announced opening of a factory to manufacture refrigerators in India.
     
  16. Lord Nemesis

    Lord Nemesis Overlord
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    FDI regulation coupled with the new e-com policy. Till now FDI regulations prevented these companies from going into retail market both online and offline. They got around it by setting up a separate isolated entity namely WSRetail and Cloudtail to handle the online retail business. The e-com policy now outlaws entity in which an FDI company has a stake in from doing retail business. So essentially that shuts down the possibility of doing retail business online or offline.

    But what would these companies do under the circumstances? They will start making agreements with reputed third party sellers to sell exclusively on their platforms. In order to prevent that, the 25% rule was setup for these companies. So even if they have some reputed seller on board, Both Amazon and flipkart will not be able to hog more than 50% of their sales volumes. These sellers would be forced to sell on other platforms. So if/when reliance enters the market, they can hog a bigger chunk of the sales volume of these sellers since they won't have the same restrictions.
     
  17. AMG

    AMG Just another poor guy
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    Cloudtail India Private Limited is a Private incorporated on 04 October 2011. It is classified as Non-govt company and is registered at Registrar of Companies, Delhi.

    Office :
    H-9, Block B-1, Tughlaqabad Extension, Mohan Cooperative Industrial Estate, Tughlakabad, New Delhi, Delhi 110044
     
  18. rdst_1

    rdst_1 Well-Known Member
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    So. It is a joint venture between Amazon and Narayan Murthy. What point are you not getting?
     
  19. Lord Nemesis

    Lord Nemesis Overlord
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    Amazon has a equity stake in both cloudtail and Appario. Cloudtail is a joint venture with Narayana murthy's Catamaran ventures and Appario is a joint venture with Patni group.
     
  20. AMG

    AMG Just another poor guy
    Veteran

    It's an Indian company incorporated in India,having its head office in India.

    FDI norms don't apply
     

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