New e-commerce rules jolt Amazon.com in India as products vanish

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According to a quick estimate, more than 400,000 items that account for almost a 3rd of Amazon's $6 billion in annual sales in India will probably disappear at least temporarily from the company's service in India. Would-be buyers of Echo speakers on Amazon India saw a message reading: "We don't know when or if this item will be back in stock". Amazon Basics products, which had become a reliable choice for phone accessories, are also no longer officially on sale on Amazon.in by Amazon and have to be purchased through resellers on the platform.

The biggest casualty, sources said, would be e-commerce platforms, including Cloudtail, a JV between Amazon.com and Narayan Murthy's family office Catamaran Ventures, and Appario Retail, a wholly-owned subsidiary of the JV between Amazon India and Ashok Patni. Flipkart's fashion arm Myntra has a wide range of labels that it's created and invested in - those too must go. For its part, Amazon India said in a statement that it needed more time to understand how to navigate the new policies, and to address the concerns of more than 400,000 sellers on its platform.

Exclusive deals with the sellers, in compliance with new norms, will also be discontinued, the sources said.

Previously significant sellers on the platform had told TechCircle that the disruption of business will be temporary, as conveyed to them by Amazon India officials.

In December, the government had announced new regulations - under Press Note 2 - that would bar online marketplaces with foreign investments from selling products of the companies where they hold stakes and ban exclusive marketing arrangements.

"There won't be one or two parties that make up the entirety of the Indian ecommerce opportunity and we certainly intend to have a share of it", Wenig said at an investors call on Wednesday.

Such strategies by global companies have been controversial in a country where organized retail accounts for only about 10 percent of a market dominated by small sellers and mom-and-pop stores. Small traders have traditionally been part of a support base for the ruling Bharatiya Janata Party.

There's also speculation that the government did this for Reliance Industries Limited (RIL) owned by Mukesh Ambani, as Reliance Retail and Reliance Jio, together will launch a new e-commerce portal soon.

In response to questions, an Amazon spokeswoman said via email: "All sellers make their own independent decisions of what to list and when and we can not comment on that". Yesterday, Amazon had also started taking down products which were non-compliant, according to this Reuters report, while Flipkart said that it was disappointed, but would be compliant.

"Reliance is likely to become the largest omni-channel retailer in the next 24 months as it has almost 300m Jio telecom subscribers who can access a bundle of financial, education, entertainment and retail services on their phone's Jio app", Singhal said.

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