E-commerce is a prominent segment in the world of fashion business growing in leaps and bounds, on the verge of threatening brick and mortar stores as more and more shoppers begin to find comfort in purchasing products online. However, online multi-disciplinary giants like Amazon and Flipkart are shaken up by the newly enforced FDI policy that limits the number of products one vendor can sell on the portal.
The Amazon India representative said in a statement that, “We await clarifications from the government on the new policy changes. As we seek clarity, we have written to the government requesting an extension of four months” as the online platform will now have to either bar products of brands it holds a stake with or withdraw it’s collaboration with the brands. The same scenario holds true for Flipkart India whilst Indian companies such as Reliance Retail, Tata CliQ, Chroma remain unaffected by the foreign direct investment policies.
The changes in these policies have caused a stir but some of the CEO’s of leading online marketplaces have expressed support to the big changes like, Snap CEO, Kunal Bahl said:
“The update to the FDI policy on ecommerce will ensure balanced growth of India’s ecommerce industry, creating lasting gains for both sellers and buyers. FDI in marketplaces is meant to enable growth of India’s MSMEs (micro, small and medium enterprises) and these changes will help create a level playing field for all sellers.”
A significant impact on the growth and revenue generated by e-commerce companies in the Indian fashion landscape, the largest blow will be seen by the private labels and in house brands created to offer incentives to customers through exclusive collections, lower costs and higher margins. With major players like Amazon having stakes in Cloudtail, there is talk that the stake will be revoked for it will be a challenge for Amazon to sell Cloudtail products.
The benefit of these drastic changes is reaped primarily by brick and mortar stores that now have a chance at offering the same value and service as online stores, disregarding any partiality.