India’s New Online Shopping Policy Spells Bad News for Buyers

India has made some drastic changes to its online shopping policy which will significantly impact how people shop.

Online shopping giants like Amazon and Walmart have some thinking to do. 

(Photo: iStockphoto)

Starting 1 February, most of the stuff you buy from Amazon, including grocery will go off its online shelves. That’s not all, any product that you were getting in a day or two (with Amazon’s Prime), may now take more than a month to be delivered.

For a country claiming to move towards a digital ecosystem, it is hard to understand the reasons behind the Indian government coming down hard on online sellers.

That’s not all, the whole online shopping experience is likely to take a hit, with less discounts on offer, which is likely to work in favour of local offline sellers. The policy, as a whole is seen as a regressive step for e-commerce.

Global brands like Amazon and Walmart (which acquired Flipkart) are not allowed to sell products that are handled by ventures set up by them.

Which means, Cloudtail, Amazon’s in-house seller cannot list items on the platform, forcing it to briefly take down products from its website. After a few hours, the products came back in stock, but you could see that the retailer’s name had been changed, in order to meet the new e-commerce norms.

And buyers will now have to bear the price, by facing longer delivery periods. What does this mean for loyalty programs like Amazon’s Prime membership? We’ll have to wait to see the effects of these changes.

India’s new e-commerce investment policy changes mean online retailers cannot sell products via vendors in which they have an equity interest, and also from making deals with sellers to sell exclusively on their platforms.

The second part of the changes means, brands like OnePlus cannot go exclusively with Amazon in the country to sell its smartphones. The same goes for a brand like Xiaomi, which cannot do exclusive deals with Flipkart for its products any more.

Delivery will now take up to 38 business days for products that had single-day delivery earlier. Say what?(Photo: Amazon India screen grab)

While the idea behind making products available across all platforms is understandable, but asking Amazon to stop selling its products through its platform definitely goes against the spirit of free-market dynamics.

What also hasn’t helped its cause is the Department of Industrial Policy and Promotion (DIPP) refusing to extend the deadline to adhere to the changes in the policy, which has already been extended once in December 2018.

Why the Change?

What has brought about the change in e-commerce policies, that too just a few months before India goes into General Elections? Industry experts believe that appeasing local sellers will be on top of the ruling government’s agenda before the voting countdown begins.

But the timing of the policy also coincides with Mukesh Ambani, Chairman, Reliance Industries announcing its intentions of entering the pan-India e-commerce space from 2019, eyeing over 1.2 million retailers and store owners in Gujarat to start with.

Amazon sells multiple products like Kindle, Echo speakers and fashion items. (Photo: Amazon)

According to this Livemint report, Reliance Industries wants to converge both the shopping mediums. The report suggests Reliance plans to go for the online-to-offline (O2O) model, where a consumer makes his buying decision via online searches, but the actual purchase is done from a physical store.

It’s hard to say right now if the ministry has made these changes to smoothen the route for Reliance Jio, but as we’ve seen with the changes made in the telecom sector during Jio’s entry a few years back, it would be hard to discount the possibility of history repeating itself.