India’s Largest Retailer Reliance Wants Govt To Tighten Ecommerce Rules

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SUMMARY

In a closed-door government meeting, Reliance told officials that India needed special regulations to ensure “non-discriminatory” treatment of sellers on marketplace websites

Last year, the government made proposals to tighten the norms for ecommerce marketplaces like Amazon India and Walmart-owned Flipkart through the draft ecommerce policy

Reliance’s backing the call to tighten ecommerce comes at a time when the oil-to-salt conglomerate is bringing all its business online via its retail arm Reliance Retail

Mukesh Ambani-led Reliance Retail, which is one of India’s largest retailers and a recent entrant to the ecommerce club, has called for tighter regulation of ecommerce marketplaces.

According to a Reuters report, the company, in a closed-door government meeting told officials that India needed special regulations to ensure “non-discriminatory” treatment of sellers on marketplace websites.

While Reliance did not name any of the marketplaces, the Indian ecommerce sector is dominated by Amazon and Flipkart. They have also faced heavy criticism from Indian retailers who have accused the ecommerce giants of flouting India’s foreign direct investment (FDI) policies, giving special treatments to sellers formed in their joint partnerships, rigging search results and creating an anti-competitive condition.

Amazon, Future Under The Govt Radar?

In June 2021, the government made proposals to tighten the norms for ecommerce marketplaces like Amazon India and Walmart-owned Flipkart through the draft ecommerce policy.

The policy plans to ban flash sales and end preferential advantage to vested or related-party vendors. It also suggested making provisions to display each product’s country of origin and displaying alternative products before customers make purchases “to ensure a fair opportunity for domestic goods.”

Post these proposals, Amazon India raised concerns about the rules hurting its sellers while Flipkart maintained that it complies with the FDI aspect of the draft ecommerce rules, refraining to comment on other aspects of the bill.

The 32-year-old Confederation of All India Traders (CAIT) which represents 80 Mn Indian traders and 40K+ trade associations, is one of the ecommerce marketplaces’ biggest critics. It claims to be the world’s largest non-corporate SME organisation and its main agenda is to promote the welfare of offline and small retailers.

On numerous occasions, CAIT has written to the CCI, demanding immediate steps for an aggressive investigation into the business model of both Amazon and Flipkart in reference to complaints of dominance and non-competitive business practices.

It has called Amazon and Flipkart, the ‘new edition of East India Company’ pointing out the need for ‘consolidation of the nationalist forces’ “as foreign ecommerce companies will adversely affect the country’s economy and retail market.”

Stand Of Other Retail Players On The Draft Ecom Rules

The Tata Group and Amazon India have previously warned government officials that the new draft of the ecommerce policy would negatively impact online sellers working with marketplaces as well as existing business ventures. Besides this, Reliance Retail had previously sought some clarity from the government on certain aspects of the new rules.

This time, not only did a Reliance executive support the traders’ woes in the meeting held on January 18, but it also said that marketplace websites must act independently and should have no relationship with their sellers, indicating officials should incorporate such provisions into policy changes for the booming sector.

This is not the first time Reliance has spoken against foreign ecommerce players. Previously, Reliance Industries has alleged that firms such as Amazon and Walmart-backed Flipkart are using capital dumping to subsidise and engage in predatory pricing, leading to massive unemployment and financial distress among the country’s small merchants and kirana stores.

With over 12K physical stores and its recent venture into the ecommerce segment, Reliance is India’s go-to ‘organised’ physical retailer and is in the earshot of ecommerce marketplaces such as Amazon and Flipkart.

The current backing of the new ecommerce rules also comes on the back of Amazon-Future Retail trials, where the former has been attempting to stall the deal between Future Group and Reliance Retail since October 2020.

Reliance Taking The Super App Approach

The news comes at a time when Reliance Retail seems to be pulling all springs to its services online via the Jio platform. Reliance Retail has also been actively investing in and acquiring startups catering to fast-growing segments. Its recent bets include:

Acquired retail lingerie business under the ‘Amante’ umbrella brand from MAS Brands;
Acquiring a significant control of Just Dial Limited
Acquiring subscription-based daily micro-delivery service Milkbasket, epharmacy startup Netmeds, online furniture startup Urban Ladder and lingerie ecommerce marketplace Zivame among others
Investing in robotics startup Adverbb Technologies, quick commerce startup Dunzo, among others.

Reliance Retail also recently reported its highest-ever revenue in the Q3 FY22, a 150% YoY rise from the same quarter last year. Its revenue was INR 57,714 Cr, as opposed to INR 47,064 Cr in October-December 2020. The digital businesses arm is home to consumer businesses such as Ajio, JioMart, and other in-house brands such as Trends, Smart, Fresh, Digital among others.

It is evident that the retail giant eyeing a bigger chunk of the ecommerce market poised to reach $200 Bn by 2026, and according to its recent move, does not mind thwarting its competition.