Amazon Takes Down Products To Comply With Ecommerce FDI Guidelines

As the revised ecommerce foreign direct investment (FDI) norms came into effect from today (February 1, 2019), ecommerce giant Amazon India has reportedly removed all the product listings from its preferred sellers such as Cloudtail and Appario Retail in India.

According to reports, the changes in the FDI ecommerce circular have badly hit the company’s private label brands such as Symbol (fashion), Myx (fashion), Solimo (home and kitchen), and its smart speaker range, Echo. The smart speakers which were earlier not available on the website, is now being sold from online sellers such as Hariom Communication LLP and 4 U Marketing. However, consumers may have to wait for about 15-20 days for the products to be delivered.

Amazon’s hyperlocal service Prime Now will also stop offering grocery and electronic products on the company-fulfilled NOW store.

Last month, it was reported that Amazon’s food retail arm Amazon Food was also planning to stop selling products through its website if the new FDI guidelines are not changed.

This decision of the company comes in line with the changes introduced in the FDI policy for ecommerce on December 26, 2018. As part of the new circular, the government prohibits ecommerce players from selling products from companies in which it owns a stake. Etailers will also not be allowed to mandate any online seller to sell products exclusively on its platform.

Following this ruling, global ecommerce players such as Amazon and Flipkart had sought an extension to the February 1 deadline. However, the Department for Promotion of Industries and Internal Trade (formerly known as Department of Industrial Policy and Promotion or DIPP) had rejected their requests.

Further, during the company’s earnings call, Amazon’s CFO Brian Olsavsky had said that the new FDI guidelines would affect the company’s price, selection, and convenience for both customers and sellers in India.

Olsavsky added that the company was uncertain about the impact that these new rules would have on the ecommerce sector. Amazon is currently analysing the situation as regards compliance with rules and regulations.

Taking down of products will prove to be a major setback for Amazon as well as the Indian ecommerce market. The company’s financial results for the third quarter ending September 30, 2018, revealed that its international growth, including India, had slowed down to 13%, compared to 27% in Q2 and 34% in Q1.

Also, business consulting firm PricewaterhouseCoopers (PwC) has predicted that the new ecommerce FDI policy may cause the Indian ecommerce sector to suffer a $45.2 Bn (INR 3.2 Lakh Cr) loss.

[The development was reported by ET.]