SUMMARY
Amazon claims to have no stake in its sellers
The brands are targeting direct sales
Since February 1, Amazon and Flipkart can’t have more than 25% stake in a seller
As large online marketplaces rush to resolve their supply chain issues to comply with the changes in FDI policy for ecommerce from February 1, a few big and small consumer goods brands are now looking to ensure their products are listed on these websites either directly or through an authorised seller.
As the marketplaces look for legal loopholes, a few brands such as Bosch, Puma, Dyson, Siemens, BPL and Bagrry’s etc are looking to take the matters in their own hands. Aditya Bagri, director at breakfast cereal maker Bagrrys India reportedly said that they would grow their direct online sales in Amazon, Flipkart and Paytm Mall to understand the online business better and ensure their products are always in stock for consumers.
German shoe and sportswear maker Puma India MD Abhishek Ganguly reportedly said the company is targeting at trebling growth in direct sales from online marketplaces this year with a lot of investment. He also wants to ensure pricing parity, no discounting on the latest products and build the brand considering Puma also operates 100 company-owned offline stores.
Also, Amazon-exclusive BPL’s COO Manmohan Ganesh reportedly said the company would set up its own seller ID so that it can continue business without disruption. On the other hand, British premium household appliance maker Dyson has reportedly started direct sales from Amazon and plans to initiate a similar process with Flipkart from this year, an industry executive said.
On December 26, 2018, the government notified changes in FDI rules for ecommerce which prohibits large online marketplaces from controlling inventory of its partner sellers and also from having any exclusive product launches.
The changes came into effect on February 1, after DPIIT refused to provide any such extension. Since then, Amazon and Flipkart, have seen as much as a third of sales volume disappear on their platforms.
In the first week of February, Amazon had started with taking down its products, however, its biggest sellers, Cloudtail and Appario, which had paused its service after FDI ecommerce rules are reportedly making a comeback. However, it claimed that the ecommerce giant does not own any equity in the seller company.
Company executives reportedly said the global brands now have the advantage of the latest single brand retail foreign direct investment (FDI) norms which allows them to sell directly to Indian consumers without any prior government approval.
[The development was reported by ET.]
