E-Commerce

Amazon India almost loses its Global Store as the new FDI policy creates a havoc

Amazon.in Box on a table

Amazon India, Flipkart, Snapdeal, and all the other companies in India have been hit hard. The reason for the same is the new FDI policy. Amazon is the company that has endured a loss which is remarkable, to say the least. The other companies haven’t really hit the numbers the American giant has. Amazon, in the month of February, hit $45 billion in losses; a special thanks to the new FDI policy. This policy has cost Amazon India a lot of things.

The company is trying to cope up with the same and is burning a lot of cash. It has become a problem of existence for one of its subsidiaries in India. The global store of Amazon has shrunk to a capacity of non-existence in India. It has managed to go down to a level where one cannot find anything they want. It is becoming worse for the American company as it has to comply with the new rules. The Indian officials are not going to revoke the policy. They have even thwarted the entry of WTO and have denied negotiating anything with them.

Amazon India’s Global Store was launched in India in the year 2016. This allowed users in India to buy products from the Amazon US store. The prices were converted and shown to the Indian audience. The company also offered brands that were not present in India. These products were linked to the local customer care services and also delivery in India.

According to a Times of India report, there are only 6000 products available on Amazon’s Global Store. There were around 6 million products on the Global Store until February and that number to go down so drastically is beyond our imagination. As per the rule in the FDI policy, the companies were banned from selling products in which they owned a stake and marketplaces will also not comply with sellers to sell products on its platform. Such rules have cost Amazon almost all of its Global Store in India. There is another rule which does not allow marketplaces to buy more than 25% of a product from a vendor.

Amazon India reduced its stake to 24% from 49% in Cloudtail. There were a host of products which were removed and were sold by both Cloudtail and Appario Retail in India. The commission was also drastically reduced so that more and more sellers were listed on its platform. The fashion sellers saw the commission drop by 35% and the FMCG category saw the commission drop by 50%.

This how bad the e-commerce market looks right now. It is a shame that the companies have to go through all of this. However, it will only be of their own good if they comply and do as the government asks.

-Unmesh Phule

Comment here