On Wednesday, the government has tightened the norms for sales on e-commerce websites like Amazon and Flipkart. The new changes include barring selling of products made by companies that the websites own a stake in and discontinuation of exclusive deals (through brand partnerships) that allow merchandise to be sold on certain platforms only. For example, some smartphones were being sold exclusively on Amazon or Flipkart.
The commerce and trade ministry also restricted heavy discount offers on these online retail platforms after several complaints from small traders that it was driving them out of business.
The new norms will be effective from 1 February and are expected to hurt profits of these businesses unless they change their business models altogether. This is because a large number of their sales are driven by the e-commerce giants through exclusive partners and privately owned labels. Amazon, Flipkart, Nyykka and other major names in this retail line have their own in-house brands that they sell exclusively on their platform. Apart from that, they have tie-ups with brands for exclusive deals.
The growth of the $18 billion industry will be hurt especially after the end of deep discounts, their biggest USP, and a clampdown on the formation of large sellers and selling among vendors.