Clar­ity on reg­u­la­tions for on­line mar­ket­places is bet­ter: Ama­zon

The Financial Express - - COMPANIES - Fe Bureau

Ben­galuru, April 29: Ama­zon, the global e-com­merce gi­ant, has ex­pressed sat­is­fac­tion on the new reg­u­la­tions re­gard­ing on­line mar­ket­places is­sued by the gov­ern­ment re­cently and vowed to con­tinue with its in­vest­ments in the In­dian mar­ket.

The global on­line re­tailer dur­ing a con­fer­ence call with fi­nan­cial an­a­lysts fol­low­ing its lat­est quar­terly re­sults said they were happy with the re­cent clar­i­fi­ca­tions on FDI in e-com­merce in In­dia. “We are happy to op­er­ate in any regime and frankly more clar­ity it is bet­ter,” said, Phil Hardin, head – in­vestor re­la­tions, Ama­zon.

The new norms for FDI in ecom­merce by the gov­ern­ment has clearly de­fined a on­line mar­ket­place but brought in two clauses which could act as an im­ped­i­ment. Firstly, it has pro­hibit- ed any in­ven­tory led op­er­a­tions bya­pure­playe-com­mer­ce­player and­sec­ondly,aseller­can­nothave more than 25% share on these plat­forms. Be­sides, the e-com­merce play­ers can­not pro­vide deep price dis­counts on their plat­forms.

These clauses have led to the re­work­ing of the busi­ness model of the e-com­merce play­ers like Ama­zon and Flip­kart, which have an in­ven­tory led model and a sin­gle player con­tribut­ing more than 25% of its sales. In the case of Ama­zon, the ma­jor­ity seller on its plat­form is cloud­tail while it is WS Re­tail for Flip­kart. This could also mean a halt of their dis­count­ing mod­els, which has­been­their­main­driv­ing­force to gen­er­ate sales.

How­ever, de­spite this reg­u­la­tory environment, Ama­zon is go­ing ahead with its in­vest­ments in the coun­try. Brian Ol­savsky, chief fi­nan­cial of­fi­cer, Ama­zon said, “We are so­lid­i­fy­ing and in­creas­ing our in­vest­ments in In­dia on all fronts. It is very ex­cit­ing times in In­dia.”

Ama­zon in July 2014 had com­mit­ted an in­vest­ment of $2 bil­lion in In­dia and this in­cluded ex­pand­ing its back-end op­er­a­tions while also in­tro­duc­ing new kind of ser­vices. It also re­cently an­nouncedalarge­ful­fil­ment­cen­tre in Te­len­gana.

As the Ama­zon CFO said, “We are inventing things in In­dia that does­no­tex­istinother­part­sof the world.” Ama­zon has been locked in very fierce com­pe­ti­tion with the home-grown e-com­merce player Flip­kart and in­di­ca­tions are that global re­tailer has gained an up­per hand in terms of the growth rate.

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