E-Commerce

Flipkart and Amazon find a way around the FDI policy

Amazon.in Box on a table

Flipkart and Amazon have a couple of days to figure out an alternate strategy that will attend to the new FDI policy. It has surely created a lot of ruckuses and the consumers enjoyed it as they were treated with an offseason sale. The arch rivalry between the companies was set aside and they joined hands to make sure they don’t incur huge losses. However, the companies have been working extremely hard to find a way around and they are in conversation with the government as well.

The new FDI policy is something which cuts off the online retailers from exclusivity. It seems harsh on them as the offline retailers also had a share of exclusivity but the margin was not as huge as it was before the e-commerce revolution. That said, the government has brought in several rules which the e-commerce companies have to follow any which way. The companies, therefore, are looking for ways which go around the FDI policy.

That said, the companies have found a way around the exclusivity deal. It is one of the most important things for e-commerce companies as most of their business is because they have exclusive brand rights. In that case, the companies have promised the brands that they can still have exclusivity without breaking the FDI rules. The tweaks will have to be made with the agreement between the online retailers and the brand.

FDI policy says that e-commerce platforms cannot get exclusivity but nowhere does it say that brands cannot choose certain channels only to sell their products. That said, this is the tweak the e-commerce companies will make and this is how they will retain the exclusivity with the brands. This is a loophole in the FDI policy and now that it has been announced changes won’t be made to the policy.

That said, Flipkart has written a letter to the government citing concerns over the policy. They have warned the government of deep effects on the market. Kalyan Krishnamurthy, an executive from Flipkart said that the government’s new policy should be delayed. He was of the opinion that if it is not then it will cause major customer disruption which is not good for the country.

The FDI policy is said to have disrupted the entire business arrangement of the companies. This has made Amazon and Flipkart join hands. Amazon recently promised $5.5 billion in investments into its India side of the business. While Walmart has bought Flipkart for $16 billion. The FDI policy has come as a surprise for the American companies and has had effects on their global numbers.

-Unmesh Phule

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