Online marketplaces like Flipkart, Amazon and Snapdeal had to stop ecommerce deliveries of high-value orders in Uttar Pradesh, Bihar and Gujarat from October 2015, because of the tax regulations (read: entry tax). The tax system was hurting etailers’ businesses because they were unable to fulfil the demand, in spite of the capacity to execute it.
However, thanks to GST, ecommerce biggies Flipkart and Amazon have recommenced deliveries in these States. The orders had never stopped, but etailers had to put a stop to delivering big-ticket items exceeding Rs. 5000. Nevertheless, the price restriction of Rs. 5000 has been lifted after GST implementation. And Flipkart now delivers mobile phones in Uttar Pradesh, Bihar and some parts of Gujarat.
“With GST, customers can buy products across price points from all categories on Flipkart not just mobiles. There is no more a cap on price for products across categories. Customers can avail a wide selection – with GST products can now be shipped from anywhere to anywhere without any restrictions,” Flipkart’s spokesperson said.
Flipkart happy about taking its best selling category to UP, Bihar
Mobile phones are the hottest selling product category for ecommerce biggies. And the inability to sell those in three major Indian states definitely hampered their growth. The scenario would drastically change in the post-GST era.
Ayappan Rajagopal, Senior Director – smartphones at Flipkart said,
“With GST coming in, markets of UP, Bihar and some parts of Gujarat will now be serviced, where orders were virtually nothing. We intend to increase our share in these markets which make up close to 13-15% of the total Indian market… We expect sales from these states to go up in the coming months and help us increase our overall sales by 10-20%.”
Etailers had hoped that GST would act as a solution to all their tax woes. And it is turning out to be true.
Pre-GST, the tax rate in Uttar Pradesh was 30% and approximately 22-23% in Bihar and Gujarat. Post-GST, it has substantially scaled down to 12%. The need to furnish local way bills has also gone away. Buyers also don’t have to file a VAT declaration, which was earlier mandatory for goods entering from other states in Uttar Pradesh.
Amazon too is ready to welcome buyers from these states
Amazon India has already set up fulfilment centres in these states but the etailer agreed that GST would help them to expand their business in Bihar.
Amazon’s spokesperson asserted,
“With the implementation of GST, we are now working towards specifically enabling customers from Bihar to shop for products upwards of INR 10,000. Our delivery network in these states enables us to deliver in towns like Balia, Bareilly, Mathura, Shahjahanpur, Muzafarnagar, Valsad, Anand, Navsari, Bhuj and Vapi to name a few. We have also invested in building our Fulfilment Centres in Lucknow and Ahmedabad to meet the growing demand of our customers and sellers in the region.”
With a bigger battleground to fight on, the tussle between Flipkart and Amazon would intensify. Both the etailers would aggressively work towards grabbing the attention of new buyers and selling big-ticket items. But what about the delivery nightmares, which was rumoured to be one of the unofficial reasons behind halting delivery in Uttar Pradesh and Noida? How do the marketplaces plan to deal with this issue?