Effective February 1st, 2019, India’s new ecommerce policy came into force, and this has disrupted everything.
If we talk about Amazon, then they have certainly been hit hard: Several products which were Amazon-branded under Amazon Basics have disappeared, exclusive deals have unceremoniously removed, and the worst: Share prices of Amazon in the US fell by 5%.
Similar news about Flipkart is also being reported, and we awaiting more details.
Ecommerce customers have started complaining on various social media portals, as the price of their favorite products have either increased or removed all together.
This is the darkest hour for Indian ecommerce industry.
Products Vanish From Amazon India
As per the new ecommerce policy which comes into force effective February 1st, ecommerce marketplaces fuelled with FDI cannot sell more than 25% of their products via their own vendors and companies.
This has resulted in mayhem, on Amazon and Flipkart.
Trusted retailers and sellers such as Cloudtail, Appario have scaled down their products, and several popular listings have vanished.
Pantry items, baby diapers and more such products no longer available on Amazon (at the time of writing).
Badly hit were Amazon’s own private labels such as Symbol, Myx, Solimo (home and kitchen), and Echo, their smark speaker whose sales were picking up in the last few months. Echo had completely disappeared for some hours on February 1st, but later in the day, 3rd party vendors such as Hariom Communication LLP and 4 U Marketing started selling them.
However, the delivery period is showing as more than 20-25 days in some cases.
One unnamed source from a leading ecommerce portal said, “The company has no choice, they are fulfilling a compliance requirement … customers will suffer,”
Flipkart had already warned of a major disruption, which we are now seeing firsthand.
Prime Will Stop Selling Electronics, Grocery
Amazon India’s hyperlocal delivery service Prime Now has stopped selling electronics and grocery items, via Amazon-fulfilled NOW store.
This has been done because Amazon and Flipkart cannot sell more than 25% of the product via one single vendor, and they cannot sell their own branded products now.
Users have reported that several niche offerings such as mobile accessories and batteries have also been removed from Amazon. Almost 80% of the products offered under Amazon Basics have disappeared as well.
Amazon Pantry too is now empty. A Twitter used said, “Pantry is completely empty, how I am suppose to grocery shop. Whatever government rules are, (I) don’t care, you guys fix it, I need to shop.”
Walmart has also condemned this move, and have said that Govt. took this decision ‘in haste’.
Amazon Share Prices Drop 5%
Yesterday, when Brian Olsavsky, Amazon’s chief financial officer had a call with reporters over Amazon’s fiancial results, the tension was clearly in the air.
Despite excellent financial results, better revenues and higher profits, the share prices dropped by 5% to $1,623.90, as Amazon admitted the problem in India.
Brian said, “There’s a bit of uncertainty,”, adding, “India remains a good long-term opportunity,”
Colin Sebastian, an analyst at Baird Equity Research has openly stated that Amazon is facing a diffucult situation in India right now, as he said, “The issues in India are taking a toll on the Q1 outlook, even as growth overall slows domestically,”
Overall, Amazon’s net income increased to $3 billion, which is an increase of 63% compared to last quarter. At the same time, sales rose by 20%.