Flipkart and Amazon will now have to cut down the dominance of certain products on their portal. As per the Government’s injunction, no vendor or company will be allowed to account more than 25 per cent of its overall sales in any portal.
As per market sources, WS Retail on Flipkart’s platform and Cloudtail on Amazon’s platform justify the shares of sold products on these platform, though they are not publicly disclosed. But both are believed to hold shares which is much above 25 per cent.
Compared to last year, WS Retail’s turnover has gone three times and has reached around Rs 10,000 crore in 2014-15 fiscal. It has a huge range of products like shoes, home appliances and electronics.
Backed by Catamaran Ventures, NR Narayana Murthy’s company, Cloudtail India is the largest seller on Amazon India’s portal. As per the media reports, it is believed to contribute nearly 40 per cent of sales on the platform.
Partner in law firm J Sagar Associates, Vivek K Chandy said, the new guidelines by the Government could have ample effect on the market and e-tailers who do not have a huge list of vendors.
Partner in BMR Advisors, Vivek Gupta was quoted by The Economic Times as saying: “While permitting 100 per cent FDI in marketplace models, the Government wants to ensure that marketplaces do not start acting like retailers. And hence, the policy contains safeguards, limiting their role to being facilitators rather than actual sellers these restrictions include casting no influence on pricing, playing no role as regards warranty and limiting dominant position for a single seller on the platform.”
IT industry body Nasscom said the restricting sales of a vendor to only 25 per cent of the sales in the marketplace may prove to be restrictive, more so if the vendor sells high value items. “The industry might face difficulties in case of sale of electronic items, where a vendor maybe offering exclusive access to certain items or discounts,” as quoted by Economic Times as saying.