Who would have thought that defining ‘marketplace’ will turn into such a baffling and prolonged debate?
Before we move on to the debate about the correct interpretation of an online marketplace, let’s quickly glide through the core issue.
Ecommerce players such as Amazon, Flipkart, and Snapdeal follow a ‘marketplace’ model. They claim to be technology platforms or in simple words, a link between buyers and sellers and not traditional retailers. But, brick-and-mortar retailers strongly disagree.
As of now marketplace is not a recognized model nor are there any ecommerce specific guidelines. This obviously has left a large window of opportunity open for all those shrewd business owners who know how to use (or misuse) the ambiguity present around ecommerce.
Result – millions of dollars have flowed in via foreign shores that enabled ecommerce players to fund deep discounts, set up a host of ancillary businesses, acquire customers & sellers and splurge on marketing activities across all offline and online mediums.
Therefore, retailers’ associations are putting pressure on the government to put an end to this ambiguity and resolve the issue.
But the idea has not been dropped after all, revealed Nirmala Sitharaman, Minister of State for Commerce & Industry. She went on to explain how the topic of ecommerce is being actively discussed including the debate over defining marketplace and soon we might get the final answer.
Sitharaman shared, “We are doing a lot of consultation with regard to e-commerce. If you look at the last two years, brick and mortar companies are also moving to their own online platforms, e-commerce firms that are purely only working as a marketplace are holding stocks, inventory and operating logistics. Many states have already taken action on it and are already taxing some of these firms. Today, the line that exists between brick and mortar retailers and e-commerce firms is thinning.”
Speaking about ecommerce companies’ flouting FDI policy, Sitharaman said, “Companies which are supported from overseas have deep pockets whereas companies with purely Indian investment do not have the luxury of that kind of money. So the debate has become a lot more complex, it is not just talking about FDI in e-commerce or FDI in Multi-brand retail, it is now between understanding what is retail, who is there, who is expanding into terrain that has so far been exclusively with somebody else. This has become a complex issue. We are doing a lot of consultation.”
Roughly 10 days ago, there were reports that the government has dropped the idea of defining ‘online marketplace’.
An official from Department of Industrial Policy and Promotion (DIPP) said, “We were initially contemplating coming out with a definition of marketplace. But we have dropped the idea. Technology is changing fast. It is not wise to define e-commerce companies one way or the other.”
We hope a separate ecommerce law becomes a reality soon and the ecommerce industry gets a legitimate structure.
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.
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