How one policy is disrupting e-commerce giants like Walmart and Amazon
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How one policy is disrupting giants like Walmart and Amazon

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Sourav
Written by Sourav
[email protected] | | Published on: February-04-2019 12:10 PM

India’s new e-tail policies have caused quite a stir in the e-commerce market recently. With huge restrictions now in place, both Amazon and Walmart, amongst other players, must now restructure their businesses in order to comply with these regulations. While consumers were quick to point out the rapid pace at which products were disappearing from Amazon’s catalog, there was a much bigger change waiting in store for them – a significant drop in their market value. However, before understanding what led to this drop, you must first understand the new e-commerce regulations in India:

What are the new e-commerce regulations in India?

The new e-commerce regulations in India can broadly be classified into the following changes:

  • E-marketplaces cannot sell products put out by companies that they have a stake in. If one were to look at Amazon as an example, this means that the company cannot sell products sold by vendors like Cloudtail. This is because Amazon owns Cloudtail in partnership.
  • E-marketplaces cannot favor certain vendors and offer deep discounts that drive consumers towards their websites. This regulation was put in place because these discounts were not allowing smaller e-commerce websites to compete in the same market, due to an uneven playing field.
  • E-marketplaces cannot strike deals that allow vendors to sell products exclusively on their platforms. This is, again, to offer smaller players a fair chance to compete.

What were the repercussions for Amazon and Walmart?

With these policies set in action from 1st February 2019, Amazon and Walmart have been at the mercy of a few major market fluctuations. Amazon shares that were listed on NASDAQ fell from 5.38% to $1626.23, which led to a loss of 45.22 Billion USD in market capitalization. Similarly, Walmart’s shares on NYSE fell from 2.06% to $ 93.86, which led to a loss of 5.7 Billion USD.

While experts believe that Amazon’s decision to re-allocate spending towards non-Indian avenues also led to this dip in the share prices, a large part of the same stems from the new e-commerce regulations in India. Another reason why Amazon’s shares are falling is because the company recently released its fourth quarter financial results, which led experts to believe that the first quarter of 2019 is bound to be a lighter one in terms of profits. However, most analysts at Wall Street told Barron’s Magazine that they were not concerned about these dips, and continued to view Amazon as a leader with huge shares within the retail industry.

Walmart, on the other hand, has declared its disappointment via Flipkart, along with stating that it had hoped for more time to restructure the way they conduct business. To be fair, these regulations were announced in December 2018, along with their implementation date announced as 1 February. This sudden change in policy comes as a blow to Walmart who invested 16 Billion USD in Flipkart last year.

With Walmart set to release its quarterly results sometime in February, let us see whether these policies affect the company too negatively.

About the author

Sourav

Sourav

Excellent story-teller, with a background in SEO and Digital Marketing.
Likes to write and give form to opinion and incidents.

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