• Brick-and-mortar wants the rule book thrown at e-commerce

    The government may have defined the things an e-commerce marketplace can and can’t do bu the battle between online and offline re tail on this score isn’t over just yet.

    India’s brick-and-mortar retailers are preparing to lobby the government to make sure ecommerce companies are indeed following the new rules and punish them if they’re not. “In letter and spirit, we expect there would be major non-compliance by a lot of ecommerce players,” said Future Group CEO Kishore Biyani. The Retailers Association of India, which represents more than 1,000 brick which represents more than 1,000 brick-and-mortar retailers, including Shoppers Stop, Reliance Retail and Future Group, will be sending a letter to the government in the next two days lauding the efforts ai med at creating a level playing field but also urging appropriate action if the norms are being disregarded, said two people aware of the matter. Over the past year, RAI had sought to draw the government’s attention to the lack of clarity on the marketplace model used by ecommerce companies, saying this was a disguise for multi-brand, business-to-consumer (B2C) retail, which companies with overseas holdings are barred from under the country’s foreign direct investment (FDI) policy. Ecommerce companies say they are platforms that connect buyers with sellers.

    RAI had petitioned the government to give clear policy directions on FDI in ecommerce with the aim of safeguarding the interests of retailers and brands.The grouping had approached the Delhi High Court last year after failing to get a response from the government in its quest for parity in FDI norms with ecommerce players, which have attracted billions of dollars in overseas funding using the marketplace model.

    Also read: Why the rules against heavy discounts will actually help the ecommerce bandwagon

    The association will argue in its letter that since inventory based ecommerce is explicitly prohibited under the rules, those selling groceries and private brands operating on that model should be asked to immediately cease operations.

    “While the notification said marketplace cannot influence sale price, most online retailers have private brands and can control their pricing or give huge discounts. This should not be allowed,” said one of those cited above.

    The rules also stipulate that an ecommerce marketplace can’t have one vendor or group unit accounting for more than 25% of total sales on the platform. This could have an impact on Amazon India as its marketplace is dominated by Cloudtail, partowned by the company .

    RAI’s letter will also raise the matter of advertising campaigns by online players offering guarantees. “The promises they offer today are untenable (under) the new policy,” said an executive.

    Marketplaces have to mention names, addresses and contact details of sellers in all communications, making for transparency. Marketplaces are also barred from offering discounts directly -these can only be made by vendors –in a move aimed at preventing predatory pricing. India’s three leading ecommerce companies -Amazon India, Flipkart and Snapdeal -have said that they conform to the rules.  

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