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Feb 05,2019

Blow to E-commerce: Time for Amazon and Walmart to bid adieu to India?

The pundits have been on the edge of their seats with predicting that 2019 is going to be a special year for the e-commerce, record-thrashing like never before with making over $3.3 Trillion Sales.  But just with a month down, the major blow has hit the e-commerce, specifically the big guns like Amazon and Walmart. The regulations imposed by the Indian government at the end of the year has compelled Amazon and Walmart’s owned Flipkart lose billions of money in the shape of market capitalization after the government decided ‘no extension’ to these online platforms.

India, standing tall as the world’s biggest emerging digital economy has been the epicentre for Silicon Valley’s top-notch companies, who have stashed extravagant sum in the several past years.  The world’s biggest online platform, Amazon initiated its first online shopping website in India, back in 2013. On the other hand, Walmart acquired Flipkart last year with a whopping sum of $16 billion. It should be noted here that Bezos’s company kicked off with $5 billion in the Indian market and was also eyeing to up the game with $2 billion last year in June, as per CNBC. But, now at the moment, things look way different.

What makes India so special for the giants like Amazon and Walmart is the 1.3 billion population, which is getting adapted to buying things online rather than physically heading to the markets.

Talking about the latest e-commerce regulation that was unveiled late December last year was long-pending as the online giants like Amazon and Walmart were pushing it to the delay. But with finally getting announced it was a major setback for both the companies who were battling to capture the market share of the country, which they see as their next growth frontier. This latest policy restricts them from driving drown the prices, featuring exclusive products, influence pricing, and setting a monopoly by favouring or having stake with sellers on the platform.

It will be pertinent to mention here that All India Online Vendors Association, comprising of 3,500 online sellers have been asking for the government to regulate the e-commerce rules as foreign companies Amazon and Walmart have been bagging huge money by favouring the sellers of their own and staying biased against the local sellers. Moreover, it is also being said that both these online platforms have been exploiting their dominant positions. So, under the latest legislation passed, both the companies are also abandoned from selling products on the platform of the companies they have invested in.

Amazon has not been keeping details of its partnerships with bigwig sellers under the wraps and around every other seller is well aware of that. One such partnership of Amazon is with Infosys Lt. that goes up with the name Cloudtail. Now with this new legislation taking over and 1 Feb deadline also runoff, the company must sale all the stakes they hold in this all and other such companies as well.

The bitter rivals Amazon and Walmart are sailing in the same boat in India, with even holding 70% of the online market share in the country; they were eyeing more opportunities seeking expansion in their businesses.  It should be brought under the light that following the legislation passed in December, Amazon asked for the four-month extension to “understate the details of the policy”, whereas Flipkart asked for a six-month extension. But brushing away all such requests, the Indian government asserted them to strictly follow the February 1 deadline.

The exact figures coming in after this regulation being implemented tells that Amazon was deprived of $45.22 billion in market capitalization; on the other hand, Walmart bore $5.7 billion loss in market capitalization. Many of the economic experts believe that both the companies were eyeing to invest $10 billion in the next several years but for sure they have back stepped from doing it. One might still be trying to figure out what made Indian government take such a strong decision that can directly or indirectly affect their economy and also barricade the e-commerce popularity in the country and so in the world.

The one up with this question should keep it in the notice that this is the election-year in India and all the right-wing and nationalists are the major vote bank, who none of the political party wants to lose. So, this latest initiative barring the foreign companies from raking big moolah in some capacity would be part of it. One of the top traders' organizations across the country, The Confederation of All India Traders, which claim to be the voice of over 70 million retailers, has been long asking the current government to limit the moves of online selling juggernauts. And finally, they have got the verdict in their favour, around 3-4 months shy of the general elections.

The consumers in India might not be happy as Amazon and Walmart are also stopped from driving down the prices to an extent that may be offending to those having a physical presence in the market. Moreover, the bigwig American companies will also not be allowed to market and control their personal inventory. This entire situation has forced Amazon to delist hundreds of thousands of their products overnight. It will be pertinent to mention here that this update has even pushed for Amazon’s signature devices like Echo Speakers, Fire TV Stick and Kindle to bid adieu to this platform.

Getting the above-mentioned and other thousands of items delisted, Amazon isn’t appreciating this latest update at all, and same is the case with Walmart. This worse situation can even lead to worst for foreign online stakeholder companies. It also could be an alarming situation as the products are restricted in some capacity and up next can be something even serious than that. At the same time, one can’t overlook Indian Prime Minister Narendra Modi’s ‘Make in India’ campaign focused on the production of goods in India and exporting to the other countries as well. Seeing the foreign companies like Walmart and Amazon making big money from the Indian market might be taken as a question mark to ‘Make in India’ tag in coming years. Consequently, it can lead to more of the limitations and restrictions on companies like Amazon and Walmart.

Author Bio

David Willy is a corporate group that has some of the best attorneys on board and other supporting teams as well. If you want your any Amazon related issues resolved, we are capable of doing it within minutes and that too under the desk in a legitimate way.

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