E-marketplace operators have locked horns with the Confederation of All India Traders (CAIT) that has sought a blanket ban from the government on the upcoming online festive sales.
The traders’ body has alleged a blatant violation of deep discounting rules laid down by the government in foreign direct investment (FDI) policy for e-commerce. However, e-marketplace operators said the discounts are being offered by vendors/sellers on the platform, which is only facilitating online sales.
Speaking to DNA on conditions of anonymity, a top executive from an e-marketplace said the trader’s body is painting a wrong image of the online marketplace platforms. “These are a group of middle-men traders/ arbitrage seekers who have a problem with online sellers / vendors/ local manufacturers offering attractive deals on the e-marketplace platforms. That’s because these middle-men get bypassed and sellers get a new marketing channel. The vendors are free to decide the price they want to sell their products on the online platforms that are only helping them connect with potential customers across India, manage the transactions and in some cases inventory as warehouses facility is given as a service, to be able to offer a better customer experience. Wouldn’t they do it too to maximise the opportunity in the market,” said the executive.
E-marketplace platforms are gearing for their ‘big sale festivals’ as India gets set to enter the shopping season two weeks from now. While Flipkart has already announced its ‘Big Billion Days’ sale starting September 29, 2019, Amazon India is yet to come up with its ‘Great Indian Festival’ offering.
CAIT wrote to Piyush Goyal, Minister for Commerce and Industry, last week, saying e-commerce companies are offering deep discounts that runs against the mandate of Press Note 2 of FDI Policy, 2016 later amended in 2018.
“In this context, we attach herewith a detailed representation along with substantial evidence of these portals indulging into predatory pricing and deep discounting with a request that since they are openly flouting FDI norms, a blanket ban on such festival sales should be ordered and an investigation should be conducted as to how these companies are flouting FDI norms and accordingly, action should be taken against them,” wrote Praveen Khandelwal, national secretary general, CAIT, in the letter to Goyal.
E-marketplace operators said their platforms are providing market access to lakhs of sellers, domestic manufacturers, micro, small and medium enterprises (MSMEs) and artisans by giving them access to millions of consumers across the country.
Rajneesh Kumar, chief corporate affairs officer, Flipkart Group, said it’s a technology company using innovation to solve for the unique challenges that India faces and through these cutting edge innovation support all sellers. “Today almost 2 lakh local sellers, artisans and manufacturers have access to over 150 million customers. We have also brought in thousands of kiranas and general trade stores to boost last-mile connectivity and augment their income. As an e-commerce platform, we are boosting economic activity in India, supporting local manufacturing, Indian handicraft and creating lakhs of new jobs in line with the vision of PM Narendra Modi,” said Kumar.
Sellers look for avenues and opportunities to boost their sales from festive shopping season activities that make a considerable contribution to their overall annual revenues. While sales from physical stores form a major part of their business, the online channel through the shopping festivals help in bringing additional sales. In a demand starved consumption environment wherein consumers are not forthcoming enough to make their purchases, a lot of them also wait for online shopping festivals for attractive offers on products they have been waiting to buy during the earlier part of the year.
According to Amazon India spokesperson, the festive season in India is the biggest shopping season and sellers look forward to the opportunity to fulfill customer needs. “Our marketplace provides this opportunity to more than five lakh sellers, a majority of whom are small businesses, women entrepreneurs, start-ups, weavers and artisans as well as emerging brands to offer their products to customers across India. Sellers decide the pricing for their products on our marketplace. They offer their choice of selection to their customers across the country at prices that they deem fit,” said the spokesperson.