The decision to allow 100 per cent FDI in e¬commerce market places shows government’s clear intention to promote fair competition in the retail sector, the Retailers Association of India (RAI) said today.
Though the actual impact depends on the enforcement of the said guidelines, the association said in a statement.
It said the condition that an e¬commerce firm will also not be permitted to sell more than 25 per cent of total sales from one vendor or its group companies will prevent marketplaces from behaving like pseudo retailers and ensure that they stay true to their claim of being technology platforms.
“The policy seeks to provide a level¬playing field. In defining the marketplace based model of ecommerce, it states that a marketplace should be a technology platform service providers that also provides ancillary services. Based on this, marketplaces cannot anymore claim to be retailers or online stores,” RAI said quoting Rakesh Biyani, Jt MD, Future Retail.
The guidelines stating that a marketplace cannot offer warranty or guarantee for products sold on their platform will ensure that they do not make promises on behalf of sellers to influence purchase decisions, he said.
“Since marketplaces cannot offer any warranty or guarantee on products, the promises they offer today are untenable under the policy,” Biyani added.
RAI also said that the norms that E¬commerce entities providing B2C marketplaces will not be able to directly or indirectly influence the sale price of goods or services would also create the level-playing field since they were participating in B2C retail trading with heavy discounts from their coffers.
RAI had been calling the government’s attention to the impact on retailers due to the lack of clarity on B2C based Ecommerce disguised as B2B commerce
“RAI had petitioned the government to give clear policy directions on FDI in ecommerce with the aim of safeguarding the interests of retailers as well as customers,” it said.
The DIPP’s notification has ended the ambiguity surrounding what construes ecommerce.
RAI CEO Kumar Rajagopalan said that retailers traditionally have been welcoming marketplaces in the form of malls in the brick and mortar space.
“This clarification will hopefully ensure that marketplaces collaborate with retailers like online malls,” he added.
Further it said that marketplaces will have to mention the names, addresses and contact details of the sellers across all communications which will bring in transparency for customers.
“Considering that inventory based e¬commerce is now explicitly prohibited, many ecommerce players offering groceries and private brands which are all inventory based servicing or being serviced by just one seller, would have to immediately cease operations,” RAI said