E-shopping To Cost More, No Quick Deliveries

Consumers of etailing websites will now have to wait at least 4-7 days for their deliveries to arrive as compared to 1-2 days earlier and pay relatively more after the new e-commerce FDI policy took effect.

The impact is especially felt on Amazon, which has removed a significant amount of products from its platform across categories like mobile, electronics, grocery and fashion, among others. Sellers like Cloudtail and Appario (where Amazon is a JV partner) have almost become nonexistent on the platform. After Amazon’s December quarter earnings on Friday, company CFO Brian Olsavsky told analysts the new policy will hit pricing and selection for consumers as well as sellers in India.

Globally, Amazon’s international business reported losses of $642 million during the December quarter compared to $919 million in the year-ago period — down by about 30%. Amazon’s aggressive spends for the India market have been cited as one of the reasons for the thin margins in the international business. For the same period, Amazon’s global sales grew to almost $21 billion from $18 billion a year ago.

In a conference call, Olsavsky said, “Our main concern is to try and minimize the impact to our customers and sellers in India. We have built our business around price selection and convenience. We don’t think the changes help in those dimensions for both customers and sellers in India. We remain committed to complying with all laws and regulations but we are evaluating the situation.”

Flipkart, too, issued a statement, saying it was disappointed with the government’s move to stick to the original deadline. Flipkart did not see an immediate impact as it does not own shares in any of its large sellers directly, but is likely to see an effect in the coming weeks as the existing inventory runs out and the e-tailer restructures agreements with brands.

The new regime is affecting products of third-party brands as well as Amazon’s in-house labels. Industry estimates suggest Cloudtail and Appario moved at least 50% of shipment volumes for Amazon, which are now largely unavailable to be sold. Only a part of that is currently being routed to smaller sellers and Amazon is giving delivery estimates of 5-7 days, or more in some cases.

In the last 24 hours, the platform has seen new sellers emerging that are listing some of Cloudtail’s products on Amazon. Jai Samadha is one of the newly launched seller entities. Pantry, the monthly grocery segment for Amazon, also has almost stopped selling FMCG and other daily movables. This reflects on Prime Now (express delivery platform) too, where it has removed its own store — Now Store — run by Cloudtail. The large sellers are part of what is called the Fulfilled by Amazon (FBA) programme, which ensures adequate inventory and faster shipping, once an order is placed on the platform.

Over the last one year, sellers like Green Mobiles, Amazing Buy, Olympia Industries, UBSPD and uRead-Shop have increased their exposure on Amazon India, but Cloudtail and Appario remain critical to the local arm of the Seattle-based e-tailing giant. To put in context, these two are among Amazon’s largest 20 sellers globally, according to Marketplace Pulse, which collects data on such platforms internationally.

As Amazon started cleaning its platform after realizing the government is not extending the deadline, sellers like 4 U Marketing were selling Amazon devices. “All sellers make their own independent decisions of what to list and when, and we cannot comment on that,” an Amazon India spokesperson said. For Amazon, the new rules will also impact its critical base of Prime subscribers who are promised a wide selection with fast deliveries here. A Barclays report last year said Amazon has about 7 million paid Prime subscribers here. Prime users tend to buy more often than non-Prime users. ―Newsrain

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