The New Fiasco For Amazon And Flipkart In India

Amazon and Flipkart are the two e-commerce giants which require no
introduction. They have captured the domestic market with a strong
grip and has a substantial sale in the online world. The reason behind
that is the lucrative offers and the discount package that they offer to
the customers. They sell products online which no retailer can provide
to their customers, and that is the reason they are so popular among
the masses. Apart from that, the availability of multiple products in a
single portal and that too at slashed rates becomes the main attraction
for these online portals. Both Amazon and Flipkart have expanded their
business to a great extent in the past decade and are able to hold that
place with an iron fist.

However, there are clouds of trouble on the business of these two
online retail giants. It is because of the policy of the Indian government
that has been introduced to curtail some of the benefits of the e-
commerce industry. It can have very grave implication on the online
industry as the government has banned both of these portals from
sourcing more than 25% of their inventory from a single vendor. The
catch is that many of these vendors hold stakes in these retailing giants.

To add more fury to this matter, the current authority has also banned
these online portals from entering into exclusive deals. Looking at this
curtailment, the operations of Amazon is going to have a direct impact
on its operation in India. It is because the major sellers are Cloudtail
and Appario which invested in Amazon. Among them, Cloudtail is a
joint venture of Amazon and Infosys former head Narayana Murthy’s
Catamaran venture.

Flipkart, on the contrary, might not suffer from a huge setback as its
exclusive seller WS Retail had apparently stopped its operation in the
month of August. The company minted revenue for itself by offering
exclusive deals to its customers. As a result, it was able to sell 3 million

smartphones in a single day in the month of October due to its pact
with smartphone brands like Oppo. With the passing
of above resolution by the government, the exclusive agreements made
with brands like Retailnet, Omnitech Retail and SuperComNet will
become totally invalid.

Smartphones sale make a huge effect on the revenue of the e-
commerce business. But this current ruling can have a severe negative
impact on the proportion of sale of the smartphones. Technically, the
resolution came as an aftermath of assembly elections in India. Since
the discount offers were hurting the revenue income of the offline
retailers which also holds a big mandate in the elections, it is seen as
measure by the government to safeguard their interests and to curb
their steep losses.

The entire step is seen as a way to manage the electoral losses by the
ruling government rather than benefiting the small traders. However, it
is predicted that all these measures might be temporary and it might be
reversed again which will allow the online giants to do business again in
a smooth manner.


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