Thursday 7 April 2016

Implement the New Ecommerce Rule; Say Offline Retailers: Future Retail, Shoppers Stop, Aditya Birla Retail & others to the Govt.

Indian retail is all shaken up since the declaration of 100% FDI in the marketplace format of e-commerce retailing.

The new rule states:

One hundred percent foreign direct investment is allowed in Indian goods and services marketplaces, with the e-retailing format.

It also mentions:

  • Discounts offered by marketplaces are disallowed
  • An ecommerce firm is not permitted to sell more than 25% of the sales affected through its market place from one vendor or their group companies
Ecommerce players have voiced their concerns about this new norm and all that it entails once they implement it. Some have also demanded this outrageous rule be scrapped and a new one be drawn up in its place. A couple of big time etailers have asked for a period of six months to effectively implement the rule.
IOS already covered how ecommerce entities have taken the news so far. We shed light on the 100% FDI: –
  • Snapdeal
  • Shopclues
  • Askme Bazzar
  • Confederation of All India Traders (CAIT)
  • RAI
Silent Players:
  • Flipkart
  • Amazon

Offline retailers say, “100% FDI in ecommerce? Yes Please!”

What no one really spoke about was how the new FDI regulation would affect the big league players in brick and mortar retail. And they no longer want to stay silent! The majority, if not all of India’s physical retailers, feel the FDI norms will even things out between online and offline retail.
It’s been a week since the new rule was announced and no one in online retail seems to be enforcing it. So physical retailers like, Future Retail, Shoppers Stop, Infiniti Retail, Arvind Lifestyle and Aditya Birla Retail have decided to meet up in Mumbai today, to have the new circular implemented immediately.

How will they achieve this?

These offline biggies plan on submitting a petition to the Department of Industrial Policy and Promotion (DIPP). To seek prompt enforcement of the FDI policy introduced because it will result in a level-playing field in the retail sector.
An anonymous retailer said, “All big retailers are coming together and submitting a petition to the government, seeking a level-playing field for the overall development of the retail sector. We will give new suggestions to the government in positive manner for level-playing field in offline and online retail sectors.”

Opposing Views

Offline retailers seem to be quite ecstatic about the FDI policy. But ecommerce players are repulsed by the terms and conditions which require them to change their business models and give up discounts.
“It’s in complete violation of the government policy as it was supposed to have been implemented with immediate effect,” claims an office bearer of the Retail Association of India.
Venture capitalist and founder of India Quotient, Anand Lunia, said, “The prime minister has launched Startup India Campaign but new e-commerce policy is like Hands-up India campaign for e-commerce start-ups.”
“The new policy is curbing innovation in e-commerce sector and that it is not practically possible to implement it.” An industry official said.
As per a report by property consultant Knight Frank India and Retailers Association of India, physical retail will dwindle from its 17% in 2014 to 13% by 2019. On the other hand, online retail will surge to 11% in 2019 from its mere 2% in 2014.
What about the retailers with one foot in offline retail and the other in online retail? Like Aditya Birla and Future Group? Do they care that little about their ecommerce ventures and investment?

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