To gain more loyal customers in an economy that has still growing base of internet users, e-commerce marketplace in India over the years have been resorting to deep discounts. However, the move has vehemently been opposed by small traders, who are hurt by this deep discounting exercise.
The government who has also taken note of their concern have laid out multiple regulations for e-commerce marketplaces, but there has been hardly any end to deep discounting.
Months after revision of FDI rule for e-commerce firms that barred them from heavy discounting, it seems like deep discounts by marketplaces have returned in a new avatar.
Again, Amazon and Indian trader group have indulged in public strife over discounted products being offered on the marketplace in an open panel discussion organised by the Confederation of All India Traders (CAIT).
As per the Indian traders, the marketplaces are using complex business structures to bypass the rules and indulge in deep discounting.
Deeming the allegations baseless, Amazon’s senior corporate counsel, Rahul Sundaram defended its marketing strategies and stated that Amazon which provides growth opportunities to more than 5,00,000 small merchants and traders in India does not influence product pricing on its website.
According to Sundaram, it is a factor of the entire retail market that you will get discounts.
On the contrary, the trader’s body didn’t agree with his hypothesis. It’s a known fact that major marketplaces including Amazon and Flipkart, keep violating Press Note 2 by influencing prices and deep discounting among others.
Trader bodies allege that marketplaces with billion of USD in funding are a threat to the existence of brick & mortar stores (especially small ones)
The Indian government has been trying hard to put checks on discounts and freebies offered by e-commerce firms warned Amazon and Flipkart on several occasions. Walmart (Flipkart’s owner) and Amazon are lobbying hard in the US so that the Indian government get softer on enforcing Press Note 2.
Taking into account serious opposition from the offline lobby, now the question is how will the Indian government deal with the issue which undoubtedly has become one of the most significant recent trade friction between the two economies.
The development was reported by ET first.