In what could be a surprise blow to major e-commerce players like Amazon and Walmart-owned Flipkart, the Indian government has imposed restrictions on these companies in order to prevent them from selling products supplied by their affiliated companies and offering their users exclusive discounts and products. All these new guidelines and policies will go into effect February 01, 2019, ahead of General Elections.
These new policies could bring some major shifts in terms of how these companies are operating and strategising their business in India. According to the New York Times, these policies might cause Amazon to stop competing with independent sellers and put an end to the company’s proprietary Echo line-up of smart speakers.
For both Amazon and Flipkart, the biggest challenge might occur with regards to exclusive product partnerships with smartphone brands in India. For example, OnePlus sells its phones exclusively via Amazon whereas Motorola sells its phones exclusively via Flipkart.
This year, Walmart acquired a majority stake (77 percent) in Flipkart for $16 billion. These new policies and guidelines are likely to affect Walmart’s strategy to sell clothing and other products under its own private brands such as Myntra and Jabong. These rules might also prevent Walmart from using its own supply-chain expertise when it comes to competing with independent resellers by driving down prices.
Now, it remains to be seen how the Indian e-commerce industry braces for impact. Both Amazon and Flipkart are yet to respond.
In related news, Flipkart is looking to expand into India’s fairly-crowded OTT segment in the future and compete with Netflix and Amazon Prime Video.