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Big brands, retailers see end to predatory online pricing with marketplace guidelines
Rasul Bailay, Shambhavi Anand & Writankar Mukherjee, ET Bureau Mar 30, 2016, 10.40AM IST
NEW DELHI|KOLKATA: Large brands, retailers and small sellers on ecommerce platforms have said the latest guidelines on marketplace will kill deep discounts that online platforms offer by squeezing sellers.
Kishore Biyani, chief executive of Future Group, said the policy addresses brick-and-mortar retailers concerns and will also prove beneficial for online retailers in the long run. "We just wanted them to not sell below cost price. That has been taken care of," he told ET.

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"It could be even a blessing in disguise for online companies as they no longer will have to burn cash to acquire customers. There is now a possibility their sales drop but losses reduce too."
A consultant, who counts a number of prominent ecommerce companies as clients, said the policy will benefit overall development of the Indian ecommerce space.
"There is a clause that provides a more level playing field between the better-capitalised companies, and those that haven't received the same quantum of funding," he said. "Ecommerce in India will certainly undergo a transformation, and this particular clause does put some restrictions on what was being done, till now, absolutely blatantly. They'll just have to be a bit more smarter about it."

Anil Talreja, a partner at Deloitte Haskin & Sells, said that the latest DIPP guidelines are expected to benefit the online retail sector in the long run, by cleaning up their supply chains. "You may call it a blessing in disguise and it will sanitize the whole supply chain."

The consumer electronics and cell phone makers, which are among the hardest hit by ecommerce discounts, are hoping Tuesday's notification on pricing parity will put an end to predatory pricing in the industry and lead to sustainable growth of ecommerce marketplaces.
The industry has been up against online discounting, since almost 70 per cent-75 per cent of online sales in the country were generated from mobiles, televisions and other electronics, mostly on the back of discounts, which had impacted sales of brick-and-mortar retailers.
"The offline retailers will get a new lease of life and start expansion once again since it was becoming really difficult to sell cell phones offline due to predatory online discounts," said Ashok Gupta, chairman at Optiemus Group, which operates 300 cell phone stores under Mobiliti World and UniverCell brands.
Kumar Rajagopalan, CEO of Retailers Association, a group representing brick-and-mortar retailers, said marketplaces cannot play 'pseudo retailers' any longer. "They cannot be influencing prices, they cannot be calling themselves as dukaan, they cannot be dealing with one of their suppliers dramatically, which are nothing but their own retailers," he said.
CM Singh, chief operating officer at Videocon, concurred with this view. "The days of burning indiscriminate amount of money by ecommerce marketplaces on discounting is hopefully over and this will open up opportunities for the brands to reach out to online since the platform has its own benefits - a dedicated pool of younger consumers and no boundaries," he said.

Quote:A spokesperson of All India Online Vendors Association (AIOVA), a group of about 500 medium-tolarge sellers on various ecommerce platforms, said the clause that restricts ecommerce firm from selling more than 25 per cent will prompt ecommerce platforms to broadbase their seller bases in real sense that was until now carried out mostly by their own associated entities.

"This will curb the malpractices of WS Retail, Vector E-commerce and Cloudtail whose agreements with ecommerce companies are not in public domain," the association accused.
WS Retail and Cloudtail are among the largest vendors on Flipkart and Amazon, respectively, and are accused by many as retailing fronts for the foreign-funded marketplaces. "We hope such positive steps will lead to bringing a regulatory body like RBI, SEBI, IRDA etc in marketplace based ecommerce also," an association member said.

In discussions held with DIPP, the retailers had aired their concerns over predatory pricing. "We want to ensure that there is no predatory pricing by the ecommerce companies which will especially work to the detriment of the small retailers," a senior official said.
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