The opaqueness around yet-to-be-launched GST (goods and service tax) is increasing the wariness of retailers and ecommerce sites; causing a lot of disruption in the market.
Recently, a lot of retailers were resort to offer discounts on their products inventories ahead of the GST rollout. Retailers are likely to make a loss of about 6 per cent on unsold stock purchased before May, and about 14 per cent on inventories that are a year old, against which input credits cannot be availed.
Amidst the current GST conundrum, online marketplace Amazon India has suspended its exclusive, invite-only Platinum Seller Program (PSP) temporarily, according to media reports.
It has not renewed the contracts of the top sellers until there is further clarity on GST regulations.
The company’s Platinum merchants are the highest tier of Amazon’s sellers, and receive a number of preferential perks. These include benefits in terms of lower marketplace fee and lowered logistics costs. The criteria for being a part of PSP is based on the inventory in top-selling categories, history of selling, customer experience and volume, apart from the condition that the seller will never run out of inventory at a given point of time.
Now, this move of not renewing the one-year contracts has given a direct benefit to Amazon’s Cloudtail India which has emerged as the sole Platinum seller.
“The company has conveyed to us that the renewals are on hold due to clarity on GST. There will be a single tax under GST, the benefits of which will be passed on to the merchant and to the buyer in terms of pricing. Hence, Amazon is trying to understand whether there is a need for differential standards. Even the sellers are confused and do not know what margins to quote as the impact of GST is still not clear,“ said one of the platinum sellers talking to ET.
The newspaper reported that retailers are ruing over the company’s decision of suspension of the programme will lead to fall in volumes for the business. Amazon India picks sellers to become a part of PSP in strategic categories like smartphones, fashion, large electronics and consumables.
This programme gained importance last year after the Department of Industrial Policy and Promotion (DIPP) said sales by a single seller on ecommerce marketplaces will be capped at 25% of the overall sales by the marketplace. Till then, Cloudtail was the largest seller on Amazon India.
Image Credit: Bgr.in
