A Battle Against Brick & Mortar Retail Giants?

E-commerce startups like Flipkart are coming together to form a lobby. Flipkart chairman, Sachin Bansal, has taken the initiative to bring together founders of other such e-commerce platforms in order to tackle the business threats posed by the traditional brick and mortar retail establishments.

Call for Action

According to some e-commerce companies, giant players like Aditya Birla Group and Future Group seem to be influencing government policies in their favour. They are also allegedly using their ties with the Retailers Association of India (RAI) to lobby against young e-commerce businesses.

Bansal and his counterparts recently met with Jayant Sinha, Minister of State for Finance, to discuss their concerns with him. Their aim is to create a lobby themselves to counter the unsavoury efforts by big players.

Objectionable Guidelines by RAI

• RAI issued a guideline earlier this year instructing e-commerce websites that if their funding is coming from abroad, they cannot deal in goods themselves; they can only allow third-party retailers to use their websites to sell their products.
• The association also ordered the websites that they cannot use their funding to provide discounts on goods. Only the third-party sellers on such websites could do it.
• One more demand was that no specific seller’s sales should exceed 25% of total sales of the website.

Many e-commerce players are eyeing these guidelines as a sign of unjust hostility. They find these directions a misstep because most of the funding for startups comes from abroad. Also, it’s a common practice for e-commerce companies to use their funding to sell items at discounted rates.

With this move, Flipkart and other such platforms are planning to come up with their own lobby in order to protect their interests from brick and mortar retailers.

Takeaways:-

• E-commerce platforms in order to tackle the business threats posed by the traditional brick and mortar retail establishments.
• Bansal and his counterparts recently met with Jayant Sinha, Minister of State for Finance, to discuss their concerns with him.
• They believe that RAI is putting unwanted restrictions on them under the influence of traditional retail outlets.