According to new rule eCommerce will not give mega deals but Pure Marketplace will get advantage to come on top also encourage small manufacturers and marketplace sellers , Actually it is a time to cheer because Govt. allowed foreign direct investment (FDI) in e-commerce marketplaces but with two conditions.
Will India’s Big eCommerce Portal Stop Mega Discounts ?
The 2 New Conditions are following:
- No group company or seller on a marketplace can contribute more than 25% of the sales generated on the site.
- Discounting has effectively been outlawed, it mean eCommerce will not able to give deals which is challenge-able and below sales price.
According to new policy, Discounts of 50% now a thing of the past, and the magical number can be found only on stock clearance sales now. Hot-selling items like women’s apparel and footwear have taken the worst hit, with discounts dropping to 30-35% from above 50%. Discounts on smartphones, another bestselling item, are down a clean 10%, to 20-25%. Furniture discounts have moved down to 10-15%.
India’s top e-commerce firms Flipkart, Amazon India and Paytm stand to be hit most by these two new regulations. These companies have grown rapidly over the past few years, primarily by offering deep discounts that have lured customers away from offline stores.
Investors will be happy with this new policy
There is also a lot of pressure from investors in ecommerce, as they have started to evaluate their return on investments. Sanjay Gupta, chief marketing officer, Urban Ladder, said it is difficult to run businesses at a loss for too long. “From the launch itself, our focus was on profitability. We believe in honest pricing and we try not to sell products below the cost price, while trying to remain competitive at the same time. Having said that, we have also seen discounts dropping in the past one year as online retailers have realised it is impossible to run businesses on loss for too long.” All big retailers, including Snapdeal, Flipkart and Amazon India have reported losses in financial year 2014-15. Snapdeal’s financial report revealed a loss of Rs 1,328.01 crore. Amazon India’s FY15 losses grew fivefold to Rs 1,723.6 crore. The highest loss reported last financial year was by Flipkart at Rs 2,000 crore.
Disclaimer: Information collected from various reliable resources and online news portals.