New FDI rules: Thousands of products disappear from e-commerce websites

New FDI rules: Thousands of products disappear from e-commerce websites

New Delhi, Feb 3: Amazon and Walmart ’s grand plans for India were thrown into chaos after the country implemented new e-commerce regulations, which could cut their growth in the market by as much as half this year.
Prime Minister Narendra Modi’s government tightened rules for the retail giants after strident complaints from small shops and domestic sellers. Amazon and Walmart’s Flipkart are now banned from cutting exclusive arrangements with sellers, offering deep discounts or holding any business interest in online merchants on their websites. Thousands of products have already vanished from the virtual shelves of the duo, which together account for 70 percent of India’s online retail market. Arvind Singhal of consultancy Technopak Advisors Pvt, estimates their revenue growth could fall to 15 percent in coming months from 25 to 30 percent previously.
Amazon’s shares slid as analysts pushed the company for answers on India, a market the e-commerce titan regards as the best frontier for international expansion. Jeff Bezos has pledged to spend $5.5 billion there in pursuit of growth, but executives had few encouraging words, saying on Thursday the effects of new e-commerce regulations in the country are still uncertain. Its newfound headaches in India come as a slowing global economy threatens to curtail the consumer spending retailers rely on. Amazon shares fell 3.7 per cent to $1654.60 at 9:39 a.m. in New York, while Walmart was down 1.4 percent to $94.47.
“It will be at least six to eight months before they are able to find workarounds and restore listings,” said Singhal, the New Delhi-based chairman for Technopak. What’s clear is that Amazon and Walmart now have to re-tool their strategy and potentially ward off stiffer competition from physical retailers or local rivals with deep pockets such as conglomerate Reliance Industries Ltd., which may benefit from the new laws.