In an effort to protect local markets and vendors from giants like Amazon, the Trade Ministry of India launched a series of rules that apply specifically to the business practices of e-commerce websites. With these rules coming into effect on 1 February 2019, consumers saw products vanishing from Amazon’s extensive catalog. Though some experts believe that consumers are the ones who will bear the brunt of this decision, these rules will benefit vendors in the long run, in a big way.
What are the new e-commerce rules in India?
For starters, e-commerce websites are now prohibited from selling products or brands that they have an equity stake in. As a result, Amazon has now dismantled Amazon Grocery, even though individual grocery items can still be purchased on the site. They’ve also removed a range of products like floor cleaners, sunglasses, clothes, and much more, mainly because they had some stake in the companies selling them.
In this case, certain large scale vendors like Cloudtail, which is Amazon’s largest vendor and also owned by the same, and Appario Retail, owned in partnership by Ashok Patni and Amazon, are some of the ones that have had their products slashed from the website.
Another huge change brought on by the new e-commerce rules in India was the prohibition of creating a monopoly. What this means is that e-commerce websites cannot ask their vendors to sell products exclusively on their site. Moreover, the government has also mandated that these websites must treat each vendor equally – which means that they cannot fluctuate the prices of one product over another to drive sales, and must also offer equal services in terms of warehousing, financing, advertising, payments, and so on.
With these new regulations, customers now cannot expect the deep discounts that are usually associated with e-commerce platforms Amazon and Flipkart.
How can this be great for vendors?
Shopping online has become such an integral part of an average consumer’s life that most brick-and-mortar vendors and merchants are now facing heavy losses. Factors like convenient delivery, deep discounts, and a large variety of goods available in a single space, have all encouraged consumers to choose these e-commerce giants over the local Kirana.
While one cannot argue against the convenience factor of online shopping, it is the government’s responsibility to ensure that all merchants can enjoy an even playing field when competing against one another. And from that point of view, it has certainly taken the right steps to help bring the market in that direction.
This, coupled with the widespread acceptance of UTI payments and digital wallets, should make it far easier for the brick-and-mortar merchants to hold on to their customers, instead of losing them to e-commerce platforms. Of course, beyond these basics, a space to shop from is ultimately the consumer’s choice, and no one is trying to steer consumers in specific directions with these rules. This is just a way for everyone to get a fair chance.
What remains to be seen is how Amazon, Flipkart, and other e-commerce sites recover from this blow to their inventory.