Amazon sees “uncertainty” in impact on e-commerce sector with revised FDI norms

By: |
February 03, 2019 2:16 PM

Amazon said that company is evaluating the situation to avoid any "unintended consequences" for its users and sellers.

amazon, amazon onlineAmazon continues to see “very good long-term prospects” in the Indian market.

World’s largest online retailer Amazon sees “uncertainty” in the impact of the revised FDI e-commerce policy, which came into effect on February 1, on around $36 billion worth e-commerce sector in India.

In a recent investor call, Amazon’s CFO Brian Olsavsky said, “…there is much uncertainty as to what the impact of the government rule change is going to have on the e-commerce sector there,” PTI reported as saying.

However, Olsavsky reiterated Amazon’s commitment to comply with the changed guidelines and that the company is evaluating the situation to avoid any “unintended consequences” for its users and sellers.

Amazon, which had committed over $5 billion investments in India, continues to see “very good long-term prospects” in the Indian market.

The guidelines prohibit FDI-backed e-commerce marketplaces in India to sell goods of vendors in which they have equity stakes and to have exclusive marketing tie-ups.

The norms also said that the goods of a vendor will be “deemed to be controlled by an e-commerce marketplace if more than 25% of purchases of such vendor are from the marketplace entity or its group companies.”

Amazon-backed vendors such as Cloudtail and Appario, as a result, are no longer selling on the platform.

While Amazon’s net sales for quarter ended December 2018 grew 20% to $72.4 billion, the company expects it to be down to $56-60 billion for new year’s first quarter, PTI said.

Earlier a Crisil report had stated that online retail sales worth Rs 35,000-40,000 crore could be hit as a result of the revised norms.

On the other hand, Walmart-owned Flipkart had said it is disappointed with the revised FDI e-commerce rules implemented in “haste” by the government.

Flipkart said it would adhere to the revised norms even as it is “Disappointed that the government has decided to implement the regulation changes at such haste,” a Flipkart spokesperson said on Friday.

Despite Flipkart and Amazon’s repeated requests, the Department for Promotion of Industry and Internal Trade (DPIIT) had deferred the extension of the February 1 deadline.

Walmart had made a mammoth bet in the e-commerce market last year by acquiring 77% stake in Flipkart for $16 billion.

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