The change in FDI policy in e-commerce will be a big setback to eminent jurists like Amazon and Flipkart, since these two companies have goods worth 2 to 2.5 thousand crores each. The worry of concern for them is how to eliminate this huge reserves before February 1. Actually, the new policy clearly states that an e-commerce company can not sell the goods of that vendor to its platform, in which the e-commerce company or its group companies have a stake.
E-commerce companies make three months of stock of products of fashion, accessories and other soft-line categories of brands with their own tie ups. This is the job of Retailnet for flipkart and cloudtail for Amazon. These two companies buy products from small brands, which are sold online on e-commerce platforms. A fashion brand CEO told on condition of anonymity that raw estimates show that Amazon-Flipkart has deposits of nearly Rs 5,000 crore.
Actually, fashion and soft line categories are among the three big businesses of both companies. In the last festive season, sales of this segment of the goods were priced at Rs 2,500 to Rs 2,800. According to industry sources, Flipkart, Myntra and Amazon are in the first, second and third positions in terms of sales share respectively. Now the big officers of these companies are considering options to free up their reserves within a month.
Sources told that alpha sellers like Cloudtail and RetailNet are going to talk with their different brands about their stores. A source familiar with this said, ‘This is a big problem because they were not afraid of such major shocks.’