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Online-exclusive brands chalk out plan to work around new FDI e-comm policy

Now that new norms will soon be in place from February 1, these brands have started talking to multiple e-commerce companies to sell products, which might help them reduce the overall impact on sales.

twitter-logo BusinessToday.In   New Delhi     Last Updated: December 31, 2018  | 10:13 IST
Online-exclusive brands chalk out plan to work around new FDI e-comm policy

Online exclusive brands are planning a slew of measures in the wake of the recent changes in the Foreign Direct Investment (FDI) norms for the e-commerce industry. Earlier these brands used to sell their products on one particular platform to maximise sales and profit. Now that new norms will soon be in place from February 1, these brands have started talking to multiple e-commerce companies to sell products, which might help them reduce the impact on sales. Many of them are also planning to open offline stores to enhance sales.

The FDI new rules are forcing the online-exclusive brands to adopt new strategies to stay relevant in the market. As per the revised FDI policy, the "e-commerce marketplace entity will not mandate any seller to sell any product exclusively on its platform only".

Notably electronic and smartphone brands like Vu, BPL, MARQ, TCL, Sanyo, Blaupunkt TV, Thomson, Xiaomi, OnePlus, etc, operate as online-exclusive brands on online marketplaces like Amazon India and Flipkart. Companies like VU, BPL, TCL, IFFalcon, Kodak, and Sanyo have already started finalising the alternative strategy to work around the FDI policy.

BPL, which claims to be the largest seller of 32 inch TV on Amazon, says the company may become a seller by itself. The company may either become a seller by itself on the platform or start offline sales in a controlled manner as Plan B, the Economic Times quoted Manmohan Ganesh, Amazon-exclusive BPL's COO, as saying.

Also read: Flipkart, Amazon may not be able to offer big discounts as govt tightens e-commerce norms

Similarly, iFFalcon, a Flipkart-exclusive brand, is planning to initiate talks with both Flipkart and Amazon to avoid the new FDI regulations. The company is also planning to launch its e-store to maximise its sales.

Besides, brands like Xiaomi and Oneplus, which forayed into the country as online exclusive brands, have already started spending on retail expansion to gain the market share. The new FDI policy will also affect companies that were trying to enter the Indian market through the online route, say market analysts.

The government's changing stance on regulating the e-commerce industry in India has been termed as a body blow to e-commerce giants like Amazon and Walmart, both of which tried to enter India the FDI route. But, the new policy could end their dominance in the domestic market, say experts. The government has already said that the revised norms are aimed at protecting the interest of domestic players, who have to face tough competition from e-retailers having deep pockets from foreign investors.

Also read: Kishore Biyani hails new e-comm FDI policy; says Amazon, Flipkart can't build brands now

Also read: E-tailers, traders welcome new FDI policy; small vendors say 25% limit will deter entrepreneurship

Edited by Manoj Sharma

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