Ecommerce Players Sign Marketing Price Agreements With Sellers: Report

Indian major ecommerce players Amazon and Flipkart are now reportedly signing agreements with online sellers to fix a market operating price for each product. 

This move came on the heels of the recent reports about the government asking online sellers to give proof that product discounts are offered by sellers and not the ecommerce marketplaces.

According to a media report, an anonymous executive said, “ecommerce players are asking brands to give in writing negotiated, predetermined prices for products to marketplaces and certify that any discounts beyond this will be borne by them and marketplaces and sellers will have nothing to do with it.”

This agreement is said to also include a price guarantee clause which means that if a product is being sold on any other marketplace at a lower than the agreed upon market operating price, the platform will have the freedom to match that lower price rate. However, the difference in price will be reimbursed by the seller and it will issue a credit note to the platform. 

“Earlier, platforms would drop prices at will by funding the discount to remain competitive,” the report added.

Govt’s Efforts To Regulate Ecommerce

India’s new ecommerce rules  which came into effect on February 1, had targeted deep discounts being offered by online marketplaces such as Flipkart and Amazon. Such policy provisions are expected to help the government in ensuring a level playing field for offline and online retailers.

Also recently, the government was reported to be planning an ecommerce policy which might  set a limit on the maximum discount that can be offered on a product. Further, the platforms might have to also give detailed break-up of the discount in the pricing details to ensure ecommerce players are not the ones financing it. 

Companies would even need to get yearly audits of discounts done mandatorily by independent auditors to ensure there has been no predatory pricing. 

Earlier last month, Indian Commerce Minister Piyush Goyal had met with the representatives of Indian ecommerce companies to carry out an in-depth discussion on ways to boost the India ecommerce market and thus benefit both the small Indian retailers and ecommerce consumers. 

The meeting attendees included Amazon, Walmart-owned Flipkart, Snapdeal, Shopclues, Swiggy, Zomato, UrbanClap, Udaan, MakeMyTrip, and Yatra.

The Minister had then also asked RBI to speed up the implementation of a statutory audit clause in the Press Note 2 of 2018.

The referred clause has mandated ecommerce marketplaces such as Amazon, Flipkart, and Snapdeal, to submit a certificate along with a report of statutory auditor of RBI by September 30 of each year. This clause was added to ensure that companies are complying with the new FDI ecommerce rules.

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