Deep discounting is continued by Amazon: CAIT

It is absolutely true that, e-commerce marketplace in India could survive only if when one offers deep discounts, else they they could not survive. There are some cases also been observed that, at times look alike products and faulty products also reaches to the customer, where company founds it as defective ones. It is case with most of the e-commerce players operating in India.

An expert says, why someone will give anything with less price. However, business means one has to earn money, but in many cases e-commerce companies are burning money at some point of time,togain more loyal customers in an economy that has still growing base of internet users, However, the move has vehemently been opposed by small traders, who are hurt by this deep discounting exercise. Now, a question comes weather the predatory pricing compeletely stops?

The government who has also taken note of their concern have laid out multiple regulations for e-commerce marketplaces, but there has been hardly any end to deep discounting. Under the new rules, India will not allow eCommerce companies to sell products from businesses that they have an equity interest in. Also, the companies can’t have exclusive agreements with sellers. For example, Xiaomi can no longer sell Mi phones only on Flipkart, which is a common practice in the country during a new phone launch.

Months after revision of FDI rule for e-commerce firms that barred them from heavy discounting, it seems like deep discounts by marketplaces have returned in a new avatar. Again, Amazon and Indian trader group have indulged in public strife over discounted products being offered on the marketplace in an open panel discussion organised by the Confederation of All India Traders (CAIT).The marketplaces are using complex business structures to bypass the rules and indulge in deep discounting.

Deeming the allegations baseless, Amazon’s senior corporate counsel, Rahul Sundaram defended its marketing strategies and stated that Amazon which provides growth opportunities to more than 5,00,000 small merchants and traders in India does not influence product pricing on its website.

According to Sundaram, it is a factor of the entire retail market that you will get discounts. It’s a known fact that major marketplaces including Amazon and Flipkart, keep violating Press Note 2 by influencing prices and deep discounting among others. Trader bodies allege that marketplaces with billion of USD in funding are a threat to the existence of brick & mortar stores.

The Indian government has been trying hard to put checks on discounts and freebies offered by e-commerce firms warned Amazon and Flipkart on several occasions. Walmart (Flipkart’s owner) and Amazon are lobbying hard in the US so that the Indian government get softer on enforcing Press Note 2.

Now the question is on how will the Indian government deal with the issue which undoubtedly has become one of the most significant recent trade friction between the two economies.