Amid allegations that e-commerce players are influencing prices through deep discounts, leading retail chain Future Retail today said such practices are putting a question mark on the market decorum.
Amid allegations that e-commerce players are influencing prices through deep discounts, leading retail chain Future Retail today said such practices are putting a question mark on the market decorum. Stating that there is a level-playing field imbalance happening due to improper discounts, Future Retail Joint Managing Director Rakesh Biyani said the government policy states that e-commerce players should not be allowed to participate in pricing and should not invest money in discounting.
“If one particular channel is misusing its money power to discount the product at a faster rate and the other channel is unable to match the price, it shrinks the market,” he told PTI. His comments came a day after the Retailers Association of India (RAI) raised concerns over the discounting model of e-commerce firms and wrote to Commerce and Industry Minister Suresh Prabhu alleging non-compliance of FDI guidelines on e-commerce.
“The FDI policy forbids marketplaces from participating in pricing directly or indirectly, but these companies are not only influencing selling price but also selling own brands/private labels through website,” the letter read. The brands have complained this time, Biyani said adding that in a scenario when the market decorum gets spoiled or where operating principles are not adhered to, it is something which is not good for the market in the long run.
He however, did not name the brands that have complained against e-commerce companies. Biyani further said even Indian Cellular Association, which represents handset makers such as Apple, Nokia and Lenovo, among others, has written to the minister to take action against online retailers. The Confederation of All India Traders (CAIT) last week had also alleged that e-commerce platforms were indulging in “deep discounting and loss funding thereby violating FDI Policy 2016 of the Union Government”.
The RAI in its letter said e-commerce players have an unrestricted and unconditional access to FDI, which is being misused to fund abnormal discounts to attract a huge customer base. “This ultimately results in multi-fold increase in valuation of such companies, despite them making losses. The aim of accepting of FDI is not to avert losses, but to increase valuation so that a few shareholders are able to achieve the maximum benefit,” it added.