ALIBABA TO WAIT AND WATCH BEFORE INDIA ENTRY

American e-commerce giant Amazon is not the only multinational entity grappling with policy bottlenecks here. Chinese internet major Alibaba, contemplating a direct India entry in ecommerce, is also learnt to be watching the policy space before it takes a plunge.

Making Alibaba nervous is Press Note 3, latest guideline on e-commerce from the department of industrial policy & promotion. This restricts discounting by sellers on any online marketplace platform.

Also, the high level of cash-on-delivery in Indian e-commerce and return of goods that come with it are another area of concern for the firm.

While permitting 100 per cent foreign direct investment in online marketplaces, the guidelines said ecommerce entities providing a marketplace will not directly or indirectly influence the sale price of goods or services. And, shall maintain a level playing field. The implication is a crackdown on companies offering discounts, cash-back or other such incentives.

Another guideline in the way is that no e-commerce entity will permit more than 25 per cent of the sales through its marketplace from one vendor or its group company.

Alibaba, which in India already has investments in Snapdeal and One97 Communications-owned Paytm, did not want to comment on the challenges or hurdles it must cross to enter the India market directly. However, watchers and analysts are listing these. Arvind Singhal, founder of retail consultancy Technopak, says the e-commerce regulation is the single biggest challenge. How a discount is to be defined is also unclear. “It’s arbitrary and not at all transparent.”

An executive at an international analyst research firm said the Jack Ma-led company is trying to iron out issues with the Customs department in India. He says Alibaba is likely to host sellers with a large number of Chinese goods as its unique selling proposition. Since return of goods is common when a customer is making payment after delivery, the company is working out the modalities of shipping back the Chinese merchandise in case of return, he said.