This has never happened before, and this is indeed unprecedented.
Amazon and Flipkart, two arch-enemies since last 7 years, have decided to shed their ego, and join forces to fight Govt. over the new ecommerce policy.
But why? Because Rs 5000 crore and their existence in India is at stake.
Flipkart, Amazon Join Forces To Fight Govt.
Ever since Govt. of India unveiled India’s first ecommerce policy draft, ecommerce companies are sweating and having sleepless nights.
No discount days, no selling via own vendors, no private labels, and more restriction stare at them, and they cannot believe that this is actually happening.
In such adverse times, major ecommerce portals: Amazon and Flipkart have decided to join their forces, and fight Govt. over these issues collectively.
Not only them, but major investors like SoftBank, Tiger Global, Sequoia, and Naspers are also planning to join them, and then talk with Govt. over the new ecommerce policies.
Infact, SoftBank has already written to NITI Ayog, Commerce Ministry and Finance Ministry over this, and a high-level meeting is expected soon.
Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce & Industry (Ficci) are being contacted for the same so that this new ‘association’ of ecommerce portals becomes stronger and more effective.
An unknown source said, “There is tangible fear that the government might make a policy that makes it unviable for Amazon and Flipkart to continue business in India.”
2019 General Elections Is The Reason?
Offline trader bodies such as CAIT and Swadeshi Jagran Manch have been putting pressure on the Govt. to stop the incredible growth of these ecommerce companies, and especially Walmart’s entry into India.
These offline bodies control a major chunk of votes, and e-commerce companies are fearing that 2019 General Elections can be a major reason for drafting these strict, anti-e-commerce rules in India.
Business Standard reported: “Industry players fear that in the run-up to the general elections, populist measures being taken to appease traders will have a direct impact on the long-pending e-commerce policy.”
Rs 5000 Crore At Stake?
New e-commerce policy draft says that e-commerce portals like Amazon, Flipkart cannot sell via vendors where they have a stake in, and they cannot sell private label products via their own marketplace.
Logically speaking, these rules are weird and makes no sense, but once they become law, e-commerce portals will have to comply with them.
As per reports, Amazon and Flipkart have collective inventory of Rs 5000 crore, and if the new rules come into force, these products will have to be destroyed.
Majority of these products are private labels, which they cannot sell anymore.
Supporting e-commerce companies, Arvind Singhal, chairman, Technopak Advisors said, “Physical retailers also have private labels. It is a legitimate business practice. There is no reason to single out e-commerce firms. It is not a publicly held firm, so they have every right to have a run with their business plans. Let the Competition Commission of India look into any issues, if there are any,”
We will keep you updated, as more details come in.