Online vendors feel the heat as marketplaces change policy

While consumers were elated with the discount war heating up the ecommerce markets on the eve of Independence Day celebration, online vendors, on the other hand, had enough reasons to feel the heat. It has been quite some time that the ecommerce market in India has been witnessing a jaw dropping discount war during festivities and celebrations. The online market places like Amazon, Flipkart, Snapdeal have been at loggerheads declaring maximum discounts to lure consumers which finally forced the government to pitch in with a regulation this April.

New policy changes online price war dynamics

The Department of Policy and Promotion (DIPP) has already issued guidelines on March 29, under which it is imperative for online marketplaces not to indulge in any activities influencing prices directly or indirectly. According to DIPP, the leading online marketplaces were warned to refrain from looking for loopholes to offer discounts however, the enforcement of the rule lie with the Reserve Bank of India and ED to take appropriate action under Foreign Exchange Management Act (FEMA).This year Amazon’s Great Indian Sale or Flipkart’s Freedom sale faced questions with the new regulation coming into enforcement. However, the regulation has created a major shift in online price war this year as marketplaces have clearly clarified the discounts were offered by the seller. Almost all the major marketplaces have brought on their price game this Independence Day but their officials clearly stated that the price discount was offered by the seller and the online vendors directly. Prior to the new regulation from DIPP, vendors were incentivized by the marketplaces to bear the burden of the discounts. According to the online vendors with the new regulation, major online marketplaces have found a reason to pass on the entire cost of discounts to the seller.

Online Vendors Association to meet DIPP

The All India Online Vendors Association has claimed that often they are lured by the promise of greater visibility by major ecommerce portals but in most cases the vendor suffers inevitable losses. The industry body for online vendors, Confederation of All India Traders has already filed a complaint against the e-commerce giants Amazon, Flipkart and Snapdeal before the Department of Industrial Policy and Promotion, for ‘violating’ rules and publishing ads in newspapers and other online websites about their ‘mega sale’.

However, the DIPP regulation has clearly made a difference as the discount percentage has gone considerably down this year and also being offered for the short time period as compared to last year, when almost 60-70 percent discount was going on throughout the year.