US retailer Walmart-owned Flipkart and Amazon India are planning to have a dialogue with the Government over new e-commerce policy.
Both online marketplaces fear that the e-commerce policy that the govt is working on could have long-term implications and push them towards bearing huge losses.
They plan to pull in industry bodies and their investors together to have a talk with the govt regarding this. Both the firms have a fear that the government might make a policy that makes it unviable for them to continue the business, report BS citing sources close to the development.
Flipkart and Amazon have to tweak their model of works.
Last month, the govt in a revised policy on foreign direct investment (FDI) disallowed e-commerce firms from entering into an agreement for an exclusive sale of products.
It means a seller having equity participation will not be allowed to sell its products on the marketplace. At present, e-tailers are sitting on huge inventory that came through these sellers.
This is expected to hit Flipkart and Amazon the hardest if implemented by Feb 1 2019. The implementation according to industry experts will indirectly hit their business and jobs.
E-commerce firms keep around three months inventory for products in fashion, accessories and other soft-line categories from brands they have tie-ups with. According to an estimate, Amazon India and Flipkart have inventories worth close to Rs 5,000 crore together.
This is not all. The brands operational on their platforms including BPL, Blaupunkt TV, Sanyo, Tenor, Thomson, Amazon Basics and Meizu among many may too have to tweak their business models. Though as per the latest circular, the DIPP said that the modified policy does not ban private labels and is not against consumers.
Meanwhile, Investment behemoths such as SoftBank, Tiger Global and Naspers are also chipping in and asking govt to keep the interest of investors and stakeholders in mind before finalising policy for electronic commerce.
However, traders organisations such as CAIT and Swadeshi Jagran Manch have expressed happiness over revised policy and creating a level playing field for offline traders.
DIPP official has also said that a comprehensive policy for the e-commerce sector will be out in the next few weeks.
Flipkart and Amazon have no other option but chose between adapting themselves according to new rules and convincing the government to keep their interest in mind too.
Looking at the current scenario, the latter seems a distant dream.