E-commerce policy: No more deep discounting, exclusive deals

In a bid to protect small retailers and brick and mortar shops, the government had reviewed the policy on FDI in e-commerce. The new norms bar e-commerce companies from selling products from their own companies or in which they have stake.

The Ministry of Commerce & Industry reviewed its policy on Foreign Direct Investment (FDI) in e-commerce, through a notification on Wednesday evening. These directives will be applicable from February 1, 2019.

The new e-commerce policy restricts e-commerce companies from entering into exclusive agreements with sellers/manufacturers. This policy will bring an end to flash sales and exclusive sales only through single online platforms.

The biggest impact will be from the rule that curbs e-commerce players from selling products through vendors which are actually their own subsidiaries. Like in the case of Amazon which holds stake in its largest sellers Cloudtail India and Appario Retail and Flipkart which sells through RetailNet and Omnitech Retail. These vendors bring down prices considerably, thereby leading to unfair trade practice of pressurizing seller to sell at very low rates.

Reacting to this news, retail stocks were trading mixed according to their business models. The listed e-commerce company Infibeam Avenues was at Rs. 46.45 per share, up by 1.09 per cent. While the stocks that was showing an uptick was Aditya Consumer Marketing which was up more than 6 per cent at Rs. 85.00 per share, and Aditya Birla Fashion and Retail was at Rs. 207.15, up by 0.83 per cent.

Big-box retailers DMart was trading positive at Rs. 1,565.15 per share, up by 0.66 per cent and V-Mart Retail was at Rs. 2,602.00 per share, up by 1.23 per cent. On the other hand, V2 Retail was trading in the red zone at Rs. 269.05 per share, down by 0.88 per cent, Future Retail was at Rs. 523.00 per share, down by 3.69 per cent, Future Lifestyle Fashions was at Rs. 396.90 per share, up by 0.60 per cent, Future Enterprises was at Rs. 39.65 per share, down by 3.76 per cent, Shopper Stop was at Rs. 506.25, down by 0.87 per cent and Trent was at Rs. 343.25, down by 1.01 per cent on BSE.

Meanwhile the benchmark indices, BSE Sensex was at 35,893.47, up by 243.53 or 0.68 per cent and Nifty was at 10,798.45, up by 68.60 or 0.64 per cent at 11:45 hours on Thursday.