Amazon’s Global Store Spooked By E-comm FDI Policy

In another aftereffect of the foreign direct investment in the e-commerce policy, Amazon’s Global Store is reportedly losing its virtual presence in India after it witnessed a sharp fall in the items listed on the platform.

The global store was launched in by Amazon India in 2016 after which allowed the users to buy products directly from the Amazon US website. It offered products from brands which were not available in India. The products purchased from the global store were also equipped with local customer care services and delivery.

According to a TOI report, only 6000 products main global store entity Amazon Exports Sales LLC was available in last month as compared to 6 Mn products before February.

Following the implementation of the FDI in e-commerce guidelines on February 1, e-commerce marketplaces were barred from selling products from companies where they own a stake. The rule also directed that marketplaces will not mandate a seller to sell products exclusively on its platform.

The new rules also prohibit marketplaces from making more than 25 percent of purchases of a vendor.

In order to comply with guidelines, Amazon Asia reduced its stake in Cloudtail to 24 percent from the earlier 49 percent.

In February, Amazon India had also removed all the product listings from its preferred sellers such as Cloudtail and Appario Retail in India.

It also reduced its commission charges to attract more independent sellers and show itself as a friendly marketplace. The commissions have been lowered by 35 percent for famous fashion sellers and by over 50% on specific FMCG categories.

With the new e-commerce FDI rules applied from February 1, Amazon and Walmart’s have together lost USD 50 Bn in market capitalisation.

Amazon experienced a fall in its shares by 5.38 percent at the start of February losing USD 45.22 Bn in market capitalisation.

While it was earlier reported that Amazon has suspended its plans to acquire stake in Kishore Biyani’s Future Group,  the e-commerce market player is, however, looking to get a stake in Future Coupons, a coupon provider owned by Future Group.

Amazon is also reconsidering its deal to buy stake in Aditya Birla’s More chain of grocery supermarkets.

Not only Amazon but US-based retail giant Walmart which had acquired e-commerce giant Flipkart last year had also expressed its concerns over the FDI guidelines. During an investor call, Walmart chief executive officer Doug McMillon said that they were disappointed over the guidelines and also said that they expect a more collaborative regulatory process in future.―Inc42

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