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Giving huge discounts gets difficult for E-retailers

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New Delhi: E-retailers, like Flipkart, Amazon and Snapdeal may now find it difficult to provide lucrative discounts to attract customers as the new guidelines on online marketplaces prohibit such players to influence the prices of goods and services.

While the government permitted 100 per cent foreign direct investment (FDI) in marketplace e-commerce retailing, the guidelines stated that such entities will not directly or indirectly influence the sale price of goods and services and shall maintain level playing field.

“Discounts can only be given by the owner of the goods or provider of services,” an official said.

“E-commerce guideline allows owner of inventory i.e sellers registered on marketplace to determine price including by giving discount,” Joint Secretary in the Department of Industrial Policy and Promotion (DIPP) Atul Chaturvedi said in a series of tweets.

He said the guidelines strike balance between virtual and physical stores.

“It will also end predatory pricing and will provide level playing,” he said adding the norms will empower SMEs as they can now sell their products without any physical stores and create jobs.

Industry experts too said that the guidelines on pricing may impact big e-retailers.

“Going by the current guidelines, marketplace retailers will not be able to extend lucrative discounts to attract customers.

“However, it appears that with the consent and association of the owner of the inventory, the e-retailers may yet be able to provide additional promotional discounts,” Aamir Jariwala, Secretary, E-commerce Coalition said.

Government had yesterday allowed 100 per cent FDI through automatic route in most of e-commerce retailing, a development that will boost domestic as well as foreign players like Flipkart and Amazon.

While the decision to allow 100 per cent FDI in market place e-tail — where the company only provides platform for buyer and seller to connect — will help domestic players like Flipkart and Snapdeal to attract more foreign investment, it will also open the doors for the foreign retailers like Alibaba to set shop easily.

Although the decision was widely welcomed by e-retailers, traders body CAIT strongly opposed the decision, while IT industry body Nasscom said the 25 per cent cap may prove to be “restrictive”.

Credits: PTI

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EU Regulators Question Online Retailer Amazon’s Data Usage

Seattle-based Amazon had no immediate comment.

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Amazon, online retailer
The Amazon warehouse in San Fernando de Henares is seen during a 3-day walkout to demand better wages and working conditions, on the outskirts of Madrid, Spain. VOA

EU regulators are quizzing merchants and others on U.S. online retailer Amazon’s use of their data to discover whether there is a need for action, Europe’s antitrust chief said on Wednesday.

The comments by European Competition Commissioner Margrethe Vestager came as the world’s largest online retailer faces calls for more regulatory intervention and even its potential break-up because of its sheer size.

Amazon, online retailer
A member of the media takes pictures of the parabolic antennas of the ALMA (Atacama Large Millimetre/Submillimetre Array) project at the El Llano de Chajnantor in the Atacama desert , some 1,730 km (1,074 miles) north of Santiago and 5,000 meters above sea level. VOA

Vestager said the issue was about a company hosting merchants on its site and at the same time competing with these same retailers by using their data for its own sales.

“We are gathering information on the issue and we have sent quite a number of questionnaires to market participants in order to understand this issue in full,” Vestager told a news conference.

Amazon, online retailer
The logo of Amazon, the online retailer is seen at the company logistics center in Lauwin-Planque, France. VOA

“These are very early days and we haven’t formally opened a case. We are trying to make sure that we get the full picture.”

Also Read: Europe Suffers From A Severe Measles Outbreak

Seattle-based Amazon had no immediate comment.

Vestager has the power to fine companies up to 10 percent of their global turnover for breaching EU antitrust rules. (VOA)

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