As the noose around online discounts is expected to be tightened with the upcoming draft e-commerce policy, the days might be numbered for both e-commerce companies acquiring customers via deep discounts and customers used to affordable buying.

Written By Sandeep Soni

किसी प्रोडक्ट विशेष को केवल व केवल अपने प्लेटफॉर्म से बिक्री का अनुबंध करने से भी रोक (Representational Image)

As the noose around online discounts is expected to be tightened with the upcoming draft e-commerce policy, the days might be numbered for both e-commerce companies acquiring customers via deep discounts and customers used to affordable buying.

Commerce and Industry Minister Suresh Prabhu last week said that the new draft policy would focus on transparency in online pricing and discounts. The government had also pointed out in earlier draft e-commerce policy that any group company of an online retailer or marketplace ‘may’ not be allowed to directly or indirectly influence the price or sale of products and services on its platform. While this suggests the eventual end of controversial e-commerce discounts but would the government be able to pull it off?

Killing Discounts?

“It is impossible to kill discounts though it will certainly have a dampening effect on their size,” said Devangshu Dutta, CEO, Third Eyesight – a retail consulting firm. A common percentage cut on discounts across products cannot be levied since it is tough to monitor which products are getting deeply discounted and which are not and also for how long.

“How will you decide on which product, let’s say, a 10% discount is normal but 20% is more or 5% is too less and 15% is too much. Monitoring that for millions of products listed online is quite impossible,” said Harminder Sahni, founder and MD at consulting firm Wazir Advisors.

The only way you can control discounts, according to Sahni, is to get a minimum retail price for every product so that online retailers cannot sell below that price after discounts. “Otherwise I don’t see any way of controlling discounts because eventually it is their money and they are spending and no one can stop them.”

Source: financialexpress

Back-door discounting

Domestic retailers and trader bodies have long levelled charges of ‘predatory pricing’ of goods sold online by e-commerce companies such as Amazon and Flipkart “as it is damaging the trade fabric of the country,” PTI last week quoted CAIT Secretary General Praveen Khandelwal.

If not a minimum retail price and if at all the discounts are to be monitored then the government would have to think through how it would do that. “It will become somebody’s job to monitor which products are getting heavily discounted and violating whatever discount threshold there may be and bring to the government’s notice,” said Dutta. He added that whether the government does that job or only act upon a complaint will be seen ahead but the regulation in itself cannot be implemented in a blanket form.

Large e-retailers like Flipkart have re-asserted their previous stance of having no role in influencing the pricing and discounts of products listed by their sellers. “As per the government marketplace guidelines, sellers engage and transact with customers directly,” said Rajneesh Kumar, chief corporate affairs officer, Flipkart Group, adding that individual sellers/suppliers may decide to offer discounts to consumers or run other marketing promotions while the marketplace is not involved with these decisions.

However, online retailers have allegedly been indirectly funding discounts by paying sellers the amount of discounts borne by them or reducing their commission or listing fee.

“These companies reduce the commission they take from sellers in case of discount sales. That’s how they play a role in pricing. The platforms also ask sellers to offer discounts and compel them later to undertake marketing expenses, delivery charges,” Forrester Research’s senior forecast analyst Satish Meena told The Indian Express earlier. However, in the new draft e-commerce policy, this indirect influence of price might also get checked.

Emails sent to Amazon and Paytm Mall didn’t elicit responses.

Deeper Scrutiny

Credit rating agency ICRA has called for greater regulatory supervision to the existing restrictions to assuage concerns of offline retailers. For instance, apart from the FDI norms for the marketplace model prohibiting discounting, the amount of goods purchased from online retailer’s group companies is presently capped at 25% of the sales value in a financial year.

“Despite this, the disparity in pricing in the online and offline retail modes exists,” said Kinjal Shah, Vice President, Corporate Sector Ratings, ICRA, adding that, “Indirect shareholding in vendors/suppliers by e-commerce companies also cannot be ruled out. Unless such support is restricted, a pure play level playing field between online and offline retail would not be attainable.”

The government, however, in the latest FDI guidelines has barred e-commerce companies from selling products of companies that are related to them along with a limit on goods to be sold by a single vendor. The new rules, effective from February 1, 2019, is also against any preferential treatment given by e-commerce companies to any particular seller or brand.

Eventually, if the government successfully executes phasing out of heavy discounts, would e-commerce companies lose their customers to offline retailers? “Customers who have become accustomed to online experience not because of discounts but because of factors like convenience will not shift offline,” said Dutta. Greater choice of goods and convenient return/exchange policy also works in favour of the online channel.

Source: financialexpress

Written By PEERZADA ABRAR

The government’s move, tightening norms for online retailers such as Amazon and Flipkart, is seen as a strategy to give large and small local retailers and traders in the country a leg up, ahead of the general elections scheduled for 2019.

The norms, which are seen as helping protect domestic players, would not only help online marketplace players such as Snapdeal, and Paytm Mall but also large local companies such as Reliance that are eyeing a share of the e-commerce market in the country, according to industry watchers.

“There is a realisation in the government that after demonetisation and GST [Goods and Services Tax], they needed to give something to the traders,” said an industry expert who did not wish to be quoted.

‘Intense lobbying’

Another expert said a lot of lobbying was being done by large local retailers against big e-commerce companies in the country. “Those are the ones which are going to gain from this,” said the expert also not wishing to be quoted.

Devangshu Dutta, CEO of retail consultancy Third Eyesight, said with the general elections coming up, the government could not have ignored the demands of domestic retailers. “This includes red flags highlighting that e-commerce players have grown on the back of aggressive discounting. It is the job of any democratically elected government anywhere in the world to look at domestic interests first,” he said.

Source: thehindu

Ashwini Phadnis As a special tribute to the Father of the Nation on his 150th birth anniversary, Air India will paint images of Mahatma Gandhi on its aircraft.

This is part of the two-year- long celebrations planned by the government; they will end on October 2, 2020.

Source: thehindubusinessline

Written By Sagar Malviya & Writankar Mukherjee, ET Bureau

MUMBAI | KOLKATA: Amazon India’s largest seller Cloudtail crossed the Rs 5,000 crore sales mark in the year to March but growth tapered off significantly, indicating its fading role as the company seeks to comply with foreign direct investment (FDI) rules on marketplaces.

The government said last year that it will not permit a single vendor to account for more than 25% of sales on an online marketplace that has overseas investment.

Cloudtail, a joint venture between Amazon Asia and Infosys founder Narayan Murthy’s personal investment vehicle Catamaran, posted over a 24% jump in revenue to Rs 5,688.7 crore in FY17, according to its annual return.

That’s against a 300% surge to Rs 4,586.9 crore in the previous year when it accounted for over a third of the sales on Amazon’s shopping platform in India.

“With the restriction, it was very clear that growth had to be moderated. But Amazon would still prefer to channel their goods through a seller where they can control margins and inventory,” said Devangshu Datta, CEO, Third Eyesight, a consultancy firm. Amazon India declined to comment. Cloudtail didn’t respond to an email.

Cloudtail’s numbers pale in comparison with Flipkart’s biggest seller WS Retail, which posted sales of Rs 13,921 crore for the year ended March 2016. It hasn’t filed a financial performance report for the last fiscal yet but Flipkart has also been reducing its dependence on the seller, in which its founders used to own a stake.

After the government’s guideline, which ecommerce companies had to comply with by March 31, 2017, Cloudtail almost stopped selling mobile phones a year ago but continued with Amazon private labels in India. Smartphones constitute the largest category of India’s ecommerce sales and formed a big part of Cloudtail’s overall sales in previous years.

“With the smaller pace of growth by exiting smartphones, Cloudtail will surely comply with the FDI norms of one seller accounting for 25% of total transactions at Amazon last fiscal itself,” an executive said.

Another seller said Cloudtail’s gaze is on consumables such as FMCG, nutrition, apparel and televisions, which are the next focus areas for Amazon. Personal care, baby care and nutrition are also of interest. It currently sells Amazon exclusive television brands like TCL, Sanyo and BPL.

Source: economictimes

The numbers were 27 percent higher compared to the sales last year with $24 billion of gross merchandise value (GMV)

Written By SABAHAT CONTRACTOR

Chinese e-commerce giant Alibaba sold a record $30.8 billion worth of products on its 24-hour Singles’ Day sale.

The numbers were 27 percent higher as compared to the $24 billion of gross merchandise value (GMV) of sales last year.

Even though China is facing major geopolitical and economic challenges, the story on Chinese middle-class consumption on November 12 was different altogether.

Last month, India also had one of its biggest online shopping festivals, but reported a fraction of this number at $2.3 billion during five-day period.

What got Alibaba to achieve the $30.8 billion GMV target in 24 hours is the trust placed by the Chinese consumers, the consolidation of online and offline retail, the categories of products, the income and expense of the Chinese consumers and others, according to the analysts.

While we can say that both China and India have almost the same population size, it will not be appropriate to compare the size of online e-commerce market of China and India.

“China’s online e-commerce market was between $900 billion to 1 trillion in 2017 whereas India’s e-commerce market was around $18-20 billion. There is a significant difference in size of the market in both countries,” said Ankur Pahwa, Partner and National leader, E-commerce and Consumer Internet, EY.

Income and consumption power plays an important role for a consumer. “The economies of China played an important role in the spending habits of the Chinese. The GDP per person in China is around $9000 whereas in India, it is around $2000,” said Pahwa.

Devangshu Dutta, Chief Executive of Third Eyesight said, “I don’t think that Indian and China can be compared at par. There is a huge difference in their income and consumption profiles.”

But what lessons should other e-commerce platform learn from Alibaba?

Trust plays a very important role in an online e-commerce market. Alibaba, with its closed ecosystem, has developed trust with its consumers. Indian e-commerce still lags behind on this factor.

“Quality and trust played a very important role for Alibaba in China. Also, a large part of the Chinese economy is virtual. Whereas in India, a majority of buying is still from offline,” said an analyst.

Alibaba said that more than 40 percent of consumers made purchased from international brands

. “Indian e-commerce should give a mix of categories to its consumers. Proper curation of the inventory should be there in order to target Tier 2-3 cities. Another lesson one can learn from Alibaba is the dealings with the brands,” said analyst.

Alipay plays an important role for Alibaba. “Alibaba has integrated all ecosystems in its e-commerce business. From Alipay to its logistics. It has provided qualitative and seamless experience for its consumers,” said an analyst.

Online and Offline markets

Dutta added, “Alibaba has consolidated its hold on both the business and the consumer side in the Chinese ecosystem. India still has a fragmented consumer market, and online retail is only a couple of percentages of the total market, though the supply side is consolidated between the two foreign-owned businesses, Flipkart Group and Amazon. In India, I think both online and offline formats need to evolve together.”

Source: moneycontrol