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Offline vs Online: Now retailers like Aditya Birla and Future seek PMO’s help

On behalf of a clutch of offline retailers in India, The Retailers Association of India (RAI) has sought help from the Prime Minister’s Office (PMO) on the unfair practices of e-commerce players in India, reports Times of India. RAI, which represents retailers in India such as Aditya Birla Retail Ltd, Future Group, Fab India amongst others, have complained that the e-tailers are not adhering to the government guidelines.

The government setup rules for e-commerce players, under which e-tailers must not have more than 25% of their overall sales from one vendor, and RAI has said in its complaint that the e-tailers haven’t practiced it and rather established new sellers to comply with the rules, as per the ToI report. It further added that e-tailers have setup sellers on their platforms like Cloudtail and Appario (Amazon), and WS Retail (Flipkart) to comply with the government rules. 

The association has also charged e-tailers’ pricing, discounts, etc has hurt small offline retailers, and alleged that they have an unfair advantage and deep pockets as they use foreign capital to provide discounts, and work with sellers who have close links with the companies.

Offline retailers and RAI has been fighting to create level playing field for offline retailers since a long time now. Back in December 2014,  major Indian retailers had sent letters to the Ministries of Finance & Commerce through the Retailers Association of India (RAI), complaining about the predatory pricing on e-commerce platforms.

Violating Government’s guidelines?

Note that, in March 2016,  the Indian government’s Department of Industrial Policy and Promotion, disallowed FDI in B2C e-commerce in India, while FDI in marketplaces was allowed to continue. This ruling, which was apparently the outcome of a consultation process begun by the DIPP in January 2014, also said that “E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field”.

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Offline vs Online

This development comes after when major e-commerce players had their festive sales and offered huge discounts.  Recently, a report publish by The Economic Times said that a few top retailers such as Future Group took action against Amazon, which apparently bundled its gift coupons with products of ITC, Nestle and Coca-Cola being sold on the shelves of retail chains like Big Bazaar, Hyper-City, Star Bazaar, D-Mart, Walmart, and others, without partnering with the retailers. On this move, the brick-and-mortar retailers said that they are removing the items which are bundled with Amazon coupons, and told brands not to supply them packs that have any promotional tie-up with the rival retailer.

E-tailers going offline too

While ecommerce players are allegedly eating market of offline players, small or big, they are now also eyeing to capture offline market, which can hurt offline retailer even more. For instance, Flipkart’s fashion arm Myntra is now aiming to capture offline space with fashion retail stores in the country. Two weeks ago, the e-commerce giant Amazon announced that it has picked 5% stakes in offline retailer Shoppers Stop. As part of the deal, Shoppers Stop will further expand its physical and online retail business, Amazon India will sell Shoppers Stop’s in-house brands on its marketplace through a dedicated microsite.

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