No more OnePlus exclusive on Amazon, no more Flipkart sale? 5 points you must know about new e-retail rules
E-commerce platforms like Amazon and Flipkart have achieved massive success in India thanks to big discounts, cashback offers and other attractive offers that have drawn customers away from traditional offline retail stores. This has been going on for many years now and it was bound to affect local traders who were being put out of business because of such practices. It seems the government has finally decided to put its foot down and has issued some new rules banning e-commerce companies from selling products from companies they have invested in. The new rules will come into effect from February 1.
The government has issued a directive that will put a stop to e-commerce platforms like Amazon and Flipkart from selling their own goods. The new rules also stop these platforms from selling products with unfair deep discounts whether it be through cashback offers or through exclusives. This means that a company like OnePlus will not be able to sell its phone exclusively on Amazon's platform. Here's a 5-point explainer into what the new rules are and what this could mean for you.
-- The Indian government's move involves barring e-commerce platforms like Amazon and Flipkart from selling goods from companies in which they have an equity interest. This comes after The All India Online Vendors Association (AIOVA) filed a petition in October with the anti-trust body Competition Commission of India (CCI) alleging that Amazon favours merchants that it partly owns such as Cloudtail and Appario. From February 1, these companies will not be sell their goods on Amazon. Similarly, merchants in which Flipkart has invested in will also not be able to sell goods on the platform.
-- In addition to this, the government also said that companies will be prevented from entering into exclusive agreements with e-commerce sites. This will no doubt come as a massive blow for both companies and e-commerce platforms. What this means is that OnePlus will not be able to sell its OnePlus phones exclusively on Amazon. Similarly, Xiaomi will also not be able to sell its products exclusively on Flipkart. This will appease local traders and offline retailers who have not been given the opportunity to sell popular phones due to exclusive tie-ups.
-- Exclusive sale agreements have thus far allowed e-commerce sites to sell products at lower prices, something that has created a unfair competition in the marketplace and has hit offline retailers. From February 1, it seems companies like OnePlus and Xiaomi will have to sell their products on more online channels.
-- Furthermore, the government has also clarified that cashbacks and discounts provided by platforms like Amazon, Flipkart and Snapdeal should be "fair and non-discriminatory." In other words, the government has not entirely put a stop to e-commerce sites offering cashbacks and discounts, but it has stipulated that it needs to be fair. We will have to wait and see how major sales such as Amazon's Great Indian Festival and Flipkart's Big Billion Days are affected as they are known for offering major discounts and cashback offers. Under the new guidelines, preferential services or programs like Amazon Prime and Flipkart Plus may also get affected.
-- Lastly, the new rules also do not stop Flipkart and Amazon from making bulk purchases of goods and in turn selling them to their affiliates or other companies with which that have an agreement with. These affiliates can then sell the products to other companies or consumers at lower prices.