FDI in eCommerce…decoded!

  • March 30, 2016
29.03.2016

  • The Indian government has allowed 100 per cent foreign direct investment (FDI) in e-commerce ‘marketplace model’ that is B2B, but not in “inventory led model” that is B2C.
  • The e-commerce marketplace cannot, directly or indirectly, influence the selling price of products. This essentially means companies will not be able to offer huge discounts to consumers anymore, which had become the unique selling proposition for all online retailers.
Could this signal a changing trend?

  • This may level the playing field with offline stores, which have witnessed a slump in footfalls corresponding to the increase in e-commerce.
  • This could force online players to change their model, as predatory pricing disguised by ecommerce companies, as marketing expenses may no longer exist pervasively
  • The cap of 25% on sales by a vendor on marketplaces will ensure a broad basing of vendors for a true marketplace
  • Few more global e-commerce players are expected to speed up their India entry plans…potentially benefiting sellers, Brands and Customers alike
GreenHonchos view

  • The move is a welcome step in the right direction for e-commerce that promises to even out the opportunity of good business practices.
  • Customer value proposition of product quality and services satisfaction can resurface to the core…and help differentiate Brands, Retailers & Sellers for greater opportunity
  • It’s a great time to focus on exclusive e-commerce initiatives with intent to create a huge business opportunity on the online channel

 
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