A new e-commerce policy is expected to put an end to inventory-based sales on platforms while also ending the practice of offering special incentives for using a particular payment service.
What do these proposed changes mean for e-com players, partners and end-consumers? We asked industry watchers and digital practitioners to reflect on the possibilities.
Interesting to see if there will be a level playing field
The new policy change could certainly have implications for the e-commerce platforms. However one hopes it does not impact end consumers who have benefited immensely – by way of choice and range of products on offer, discounts and speedy door delivery.
Under the FDI route, Amazon acts as an intermediary, not a seller. Even Flipkart has not been allowed to hold inventory. A quick perusal of Amazon and Flipkart’s websites shows sellers registered on the platforms have the freedom to choose if they want to use their own warehouses and ship directly once orders are received or ship using the company’s established logistics network.
Indian companies like Jio Mart and Tatas are allowed to hold inventory, and it would be interesting to note what guidelines will be issued – and whether there will be a level playing field for domestic and international players.
– Lloyd Mathias, Business Strategist & Independent Director.
End of the age of ‘Preferred Sellers’?
The new policy could not have come at a better time. Having worked with several e-commerce clients, the struggle to get noticed on the platforms is real. With the demand at the platform’s control, sellers are often asked to pay for unnecessary warehouse charges, logistics charges and forced to give discounts that kills whatever margin they have. Only when a seller agrees to all these, they then become the ‘preferred seller’ and can see sales happen. Unfortunately, not all sellers can afford these charges. This leaves these e-commerce sellers with no option other than to shut down and give in to the demands of these platforms.
If the policy is implemented as is, the consumers should see the benefits as now they have the option to choose from whom they want to buy. Instead of being forced to choose from a few preferred sellers, consumers can select from the ones that they want. But how much information will be at their disposal to select these sellers is left to be seen.
Both Amazon and Flipkart will see a major hit as the majority of the products that are sold in these two platforms are by preferred sellers.
– Praveen Kumar, Chief Decision Maker, Wild Creek Web Studio
Marketplace-owned aggregators could become obsolete
This new model if implemented would reduce competition on prices as ecom players offer heavy discounts compared to retailers. This can put an end to the ‘consumer is king’ phenomenon on these platforms.
This would eventually help manufacturers to control supply and prices and help them with margin pressures so it’s a win on the supplier side.
The biggest impact will be on marketplace-owned aggregators like Cloudtail as they would become obsolete.
This shall also impact delivery times as inventory owned and fulfilled by marketplaces get delivered in the shortest time. This will dampen consumer sentiments.
Within e-com platforms, the biggest impact will be on bigger players like Amazon, Flipkart , Myntra and Nykaa, which own maximum inventory.
– Abhimanyu Vyas, Business Head-PivotConsult
Brands which have their own websites will benefit
Platforms like Amazon and Fllipkart source volumes of inventory from brands and stock it in their warehouses. In this model, the ownership of the stock, sale to the consumers and the logistic management – everything is under the ecommerce platform.
This policy is difficult to implement but if it happens, it is likely to hit all marketplaces like Amazon, Flipkart and Myntra. On the other hand, brands which have their own website will benefit a lot from the exercise and sales on their own websites will go up significantly.
All marketplaces will be hit, all the brands D2C and others will benefit from having their own website and presence. Also, the end consumer is likely to get affected as the marketplaces were places where brands competed by giving discounts. This will change.
– Kedar Kulkarni, Vice President, Puretech Digital
Smaller players and brand-owned platforms will benefit
One must keep in mind the pros and cons of both types of model. In an inventory-based model, startups benefit from the distribution mechanics of e-commerce giants and don’t have to bear the cost and effort of logistics. However, we’ve seen biases creep in the past with conflict of interest between platform-owned brands and brands which are simply hosted on these platforms. The new policy will be concerning for bigger players which claim to be aggregators while smaller players or brand-owned platforms will be immune to this change or will perhaps benefit from this change.
– Bhavana Pandey, Founder, Wytti
Will open doors for small D2C players
The new policy won’t impact digital marketers or agencies, but it will undoubtedly open doors for small D2C players and brands that are currently only affiliated with Amazon and Flipkart. This policy will reduce the market monopoly and enable a large group of players to begin selling their products, which will lead to an influx in the D2C market and eventually benefit marketers like us.
– Harsh S Kedia, CEO, Auburn Digital Solutions
With inputs from Riya Sethi, Neethu Mohan.