On December 26, 2018, the Government of India released a series of new guidelines for ecommerce companies through a press note. The new rules will be effective February 1, 2019. It is also anticipated that a new draft e-commerce policy will be announced in a few weeks, with provisions for a regulator in the ecommerce sector.
The three key takeaways from the new policy include the following:
- A ban on online exclusive sales,
- Retailers cannot sell products on platforms they count as investors, and
- Discounts and cash back to be fair and non-discriminatory.
While we believe this policy is a work-in-progress, and many of the terms would be open for debate and interpretation, the policy has serious ramifications for ecommerce platforms such as Flipkart and Amazon, and for the India-centric strategies that smartphone vendors adopt. Beginning now, all ecommerce ecosystem players would need to redraw and realign their ecommerce strategies in the year ahead.
Heres our take on the new guidelines:
While hundreds of smartphone brands compete aggressively against each other, there are only a few ecommerce platforms. One could argue that the spirit of the policy intent is to foster a true competitive economy wherein ‘oligopoly’ is curbed, and ‘level playing field’ is encouraged.
The revised policy favours those smartphone brands that have offline channel strengths. Such players would now be in a position to make creative strategies to ramp-up their market share, against those smartphone brands that have been predominantly on an online-only mode. One other interesting trend is that online smartphone brands would no longer be at a disadvantage against other, so far, ‘exclusive only’ smartphone brands.
For new smartphone market entrants planning to take an ‘online only’ exclusive approach, they would have to relook and repurpose their India strategies with multi-channel strategies.
While companies, including the likes of Samsung would definitely benefit from the new rules, and would have a broader canvas to strategize, the new policy may not hamper the likes of Xiaomi, as they have leveraged their online growth potential, and are now focused on offline expansion aggressively.
The new rules provide a potential, and perhaps the last such lifeline to Indian smartphone players. However, while the new rules may seem to favour Indian handset players, it needs to be emphasized that it does not in anyway tilt the market balance in favour of them.
If Indian players are able to potentially refocus, rebuild and reclaim their past channel strengths, and back it up with energy and new creative strategies, they might have a shot at regaining some lost ground.
For now, there is no doubt that the landscape for ecommerce in India in 2019 will be significantly altered.
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