Leading online marketplaces like Amazon and Flipkart have found themselves in a soup yet again. The government has instructed RBI and the Enforcement Directorate to conduct a probe to see if the online marketplaces Amazon, Flipkart, and Snapdeal have indulged in unlawful trading. According to the law, companies that have got investment from foreign companies are not allowed to carry out business to customer activities. The Foreign Direct Investment (FDI) directs such companies to take part only in business to business activities.
The Confederation of All India Traders (CAIT) has raised objection over the activities of leading online portals. The CAIT claims that the online marketplaces have flouted FDI rules and have indulged in business to customer activities. It has said this in the light of the ongoing sales that the marketplaces are conducting. The CAIT maintains that due to the intensive advertising campaigns that marketplaces are holding to promote their sales, it can no longer be considered as a business to business activity.
The CAIT has said in its complaint to the Enforcement Directorate (ED), “Since they have received foreign investment, they are allowed to undertake B2B e-commerce activity and not B2C. The said advertisements addressed to the public in general tantamount to retail trading.”
The CAIT contends that as marketplaces, the companies cannot claim to give away discounts. “Doing so establishes that they are not marketplace and as such openly flout FDI policy.” It has stated in the complaint. “The said advertisements addressed to the public in general tantamount to retail trading,” the complaint said further.
In a statement in response to the issue, Snapdeal has said “Snapdeal is a technology platform that connects sellers with buyers to facilitate transactions. As a pure market place, we serve a rapidly expanding base of sellers, who find value in connecting with a large universe of buyers.” Flipkart and Amazon have chosen not to respond to the reports.
This is not the first time that offline retailers have taken up arms against their online rivals. The festive season provides great scope for all traders to make substantial profits. Competition is as old as the hills. Any further conclusion can be arrived at only once the probe is completed.
Editor team is specialized in introducing the marketplace content targeting the Indian online sellers. They plan and coordinate to bring the appealing content for the small businesses on how to partner with the e-commerce sites like Amazon and Flipkart and strategies for improving their online business.
Leave a Comment
