How Walmart, Amazon plan to counter govt's e-com move

As Amazon India, Flipkart are forced to shut down 60 categories and push out 45 mn products, a new lobby group comprising sellers is in the making to take up e-com concerns.

Illustration: Uttam Ghosh/Rediff.com

Hit by the latest e-commerce rules, American majors Walmart and Amazon are planning to pitch the sellers on their Indian platforms against the domestic lobby groups such as the Confederation of All India Traders (CAIT) and Swadeshi Jagran Manch (SJM), it is learnt.

The newly renamed Department for Promotion of Industry and Internal Trade (DPIIT) had recently clarified that there would be no extension to the February 1 deadline for e-commerce firms to comply with the conditions related to the FDI policy in the sector (known as Press Note 2), triggering panic among prominent online firms such as Amazon India and Walmart-owned Flipkart.

Since CAIT and SJM have been pushing the government for an e-commerce policy that keeps in mind the interests of traders, the foreign majors are trying to get their sellers together and put forward their cause.

Since the two biggest e-commerce companies have been adversely affected by the new conditions in Press Note 2, they are arming themselves with a parallel lobby group represented by sellers ahead of a proposed e-commerce policy.

The financial hit

DPIIT’s move to not extend the February 1 deadline has had an adverse affect on business as both Amazon India and Flipkart have had to cut down their number of sellers by as much as 30 per cent.

They have had to slash sales in almost 60 categories involving 45 million products.

Sources said while the two companies had become compliant with the norms, sales had gone down by 25 to 30 per cent.

Also back-end logistics have taken a serious hit as the delivery of goods is now delayed by almost two days.

How will the sellers help

The online players are not just getting the sellers together to form a group of their own, but are also planning to seek help from industry chambers such as Ficci and CII to understand the ways of holding a meaningful dialogue with the government.

“The last few weeks have been quite trying for Amazon India and Flipkart.

"The firms have now realised that they need to come together to voice their concerns,” said a seller on these platforms  and is part of the process of bringing vendors together.

Sources said that initially, some 1,500 sellers have been sent invites to join as members of the group.

Already the two firms and the sellers are working towards securing the first set of meetings with DPIIT and the commerce ministry.

The meetings are expected in the next two weeks.

“Apart from the big sellers, even a lot of smaller ones which rely on sales at Amazon and Flipkart have been asked to stop doing business on the platform altogether.

"We will voice their concerns too,” added the seller.

Early last year when the draft e-commerce firm was announced, many in the industry had alleged it was tilted in favour of Indian traders.