FDI Ecommerce Circular: Business As Usual With Tweaked Pacts Say Flipkart, Amazon To Sellers

With a couple of days left to the February 1 deadline for the rollout of the government’s new FDI policy for ecommerce, dominant online marketplaces, Flipkart and Amazon, have reportedly told their exclusive partners across brands of mobiles, electronics etc, that they will be to able to  operate as they do now, with some changes in their agreements.

A media report citing senior industry executives said that the companies have told their exclusive partners that even though they won’t be able to mandate exclusivity, the business will run as usual as the brands can still choose to be exclusive to them, as they are free to adopt their channel and sales strategy.

The changes in the pacts being discussed means that the brands will make it clear that they are exclusive to the platform as part of their sales strategy and the marketplace has no role in it.

For this, Flipkart has reportedly replaced the phrase “#Only on Flipkart” for the exclusive brands or products prominently displayed on its marketplace with “#Just Here”. Along the same lines, Amazon has reportedly started to minimise the “Amazon Exclusive” tag displayed for the exclusive brands or models on its marketplace.

It is to be noted that brands such as BPL, TCL’s iFFalcon, Blaupunkt TV, Sanyo, Thomson, Asus and Meizu operate only online in India through Amazon or Flipkart. While other brands and companies like Samsung, Xiaomi, Realme, Honor, Huawei, Onida, TCL, OnePlus and Vu have either launched online-exclusive models or are largely dependent on ecommerce.

On December 26, the government notified changes in business for large online marketplaces with changes in FDI policy for ecommerce, which has caused an overhaul of business processes for the companies. Beyond exclusivity, the notification also prohibited marketplaces from making more than 25% of purchases of a vendor.

Flipkart has reportedly informed exclusive partners that it will appoint multiple sellers for these brands instead of one, as is done now, to comply with the 25% clause. Flipkart executives will also distance themselves from the planning of sales strategy for these brands.

Along the same lines, Amazon has already started such a process where it distances itself from any sales promotion planning of the brands and it is now handled by the seller team.

The legal loopholes these companies have found show that the fears of traders’ associations, domestic companies etc of the large companies working around these FDI norms are albeit true even as the companies seek an extension of the deadline.

[The development was reported by ET.]