A new regulation is making things difficult for and Amazon in India, as the new regulations seem to be planned for impede their efforts to grow their businesses in the eastern country.
India’s eCommerce is the center of attraction for retail giants
eCommerce in the will exceed 100,000 million dollars (around 87,000 million euros) by the year 2022 as a greater number of inhabitants start their foray online, that is why this market is highly coveted by the internet giants.
While both Walmart and Amazon have managed to start a thriving business in India, 2019 could be the year of change after an update on foreign direct investment policies in the countrywith which you can put an end to discounts and exclusive sales.
Restrictions on exclusive sales, discounts and partnerships with suppliers
The Indian government the restrictions last Wednesday, in which basically prohibits foreign e-commerce companies from offering their consumers exclusive products.
In addition, the new guidelines have also closed the way for online retailers like Amazon sell your own products on the platforms in which you have participation, a practice that has given great results around the world to the retail giant. That is, Amazon India will not be able to sell its own products, nor those of companies owned by Amazon.
And last but not least: online retailers like Walmart and Amazon in India they will also not be able to offer discounts and cash rebates.
These new rule changes are scheduled to go into effect next february 1 and are expected to have a significant impact on Walmart which shelled out around $16 billion (almost 14,000 million euros) in the purchase of . Amazon will not pass by either since it has injected approximately $5 billion (more than 4,000 million euros) in the local market.
A low blow for Walmart and Amazon in India
Little by little, both giants of online commerce have been able to integrate with local brands for exclusive online sales, particularly offering smartphones. An example is Amazon in India that has negotiated with Xiaomi, while Flipkart collaborates with Oppo.
And of course, this new regulation will make things more difficult for the retail giants, in addition to greatly complicating relationships with their suppliers: as of February, brands will have prohibited from selling more than 25% of your total sales to any e-commerce marketplace.
While this is already a huge headache for Walmart and Amazon in India, it is not the only blow they will take.
The clearly states that “Electronic commerce entities that offer market services will not directly or indirectly influence the sale price of the goods or services and will maintain equal conditions.
The new regulation is seen as a response to the smaller vendor concernswho feel marginalized and powerless compared to the online giants.
Now, with special discounts, exclusive sales relationships and strategic investment off the pitch, Indian retailers will be able to take a breather: tens of millions of people in the country are engaged in petty trade, a key population for politicians before the next legislative elections which will take place in the spring.
What will be the new business strategy of Walmart and Amazon in India?
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