The new rules says that an e-commerce company with a marketplace model cannot exercise control or ownership over the inventory that is sold on its platform.

Amazon India pulls down thousands of products as new FDI norms kick in
Atom E-commerce Saturday, February 02, 2019 - 16:03
Written by  S. Mahadevan

After the Government did not extend the deadline to fall in line with the FDI guidelines that came into effect on February 1, ecommerce giants like Amazon and Flipkart have started feeling the pinch. Amazon, in particular, has had to remove a large number of products off its site, which were being sold through some of the companies where it holds equity. The major sellers in this category are Appario Retail and Cloudtail. In both cases Amazon has 49% equity and this is not permissible as per the fresh notification issued by DIPP in December 2018.

This means that quite a large number of products in the electronics category and other heads are currently missing with the remark “unavailable”. Some of Amazon’s products in the brands it had developed for the Indian site, like Symbol, Myx, Solimo are included in the items missing due to these sellers being taken off the roaster. Amazon’s home speaker Echo also can’t be purchased on the site till it sorts out the issue internally. Kindle e-readers and video streaming device Fire Stick are however spared from this exercise.

Also affected from today are the products under two heads Prime Now fulfilled NOW store which have been taken down. Prime Now was the window which offers the hyperlocal delivery of groceries and other products. Sone offerings like from Big Bazaar, Star Bazaar, and More have been spared and can be purchased.

Amazon has officially acknowledged that the new situation does introduce an element of uncertainty and that the company would nevertheless stick to the local laws and regulations as a matter of corporate policy.

The top sellers Cloudtail has Catamaran Ventures, the company floated by NR Narayana Murthy of Infosys fame and in the case of Appario, it is Ashok Patni of Patni Computers.

The larger question is what exactly happens to the lucrative offers being referred to as deep discounts and the next day free delivery options, going ahead. These were being managed by these sellers controlled by Amazon.

Observers feel Flipkart has been impacted less severely, though many issues are common to that company as well. The ecommerce giants realise that the Indian market holds out the potential and if handled correctly, they should be able to regain whatever ground they may lose now.