Amazon and Walmart-owned Flipkart are seeking to quell price distortions, making steep discounts less of a possibility, to ensure strict compliance with ecommerce rules for foreign marketplace companies
They are asking brands to give in writing negotiated, pre-determined prices — also called market operating prices — for products to sellers and certify that any discounts beyond this will be borne by them – marketplaces and sellers will have nothing to do with it, said executives with knowledge of the matter.
The agreement between seller and brand, initiated primarily by the marketplaces, includes a price guarantee clause. Under this, in case a product is available on another marketplace at a lower price, the seller has the liberty of matching that. However, the brands will reimburse the difference by issuing a credit note to the seller.
Earlier, sellers would drop prices at will by funding the discount to remain competitive, the executives said.
The entire process involving maintenance of market operating price, discounts and credit notes has been automated so that any audit will show the marketplaces are obeying the revised foreign direct investment norms in ecommerce that came into effect earlier this year, the executives said. (source)
How many of you are among the ones who wait desperately for that mega sale on Flipkart or Amazon, to purchase something big, just so that you could avail heavy offers? Well, we are here to bring to you that the e-commerce giants, namely Walmart owned Flipkart and Amazon have not exemplified their renowned flash sales or gigantic discounts, since the past three months. Deep discounts have completely stopped.
The Effect of Lower Discounts on Amazon and Flipkart:
Due to the reformation of the ecommerce policies and the change in FDI policies, the delicious discounts and flash deals have disappeared for almost 3 months from the online platforms, like Amazon and Flipkart. None of the products are sold at mouth-watering prices anymore, except the private label products, even though they can periodically run promotional sales.
The results observed are significant. While smartphones contribute over 50% of the overall e-commerce sales in India, this time latter, along with consumer electronics, fashion and lifestyle were presented at a discount scaled down by 10-30% between February and mid-May as compared to the same period last year. The discounts offered in the marketplaces were down by 11-14%. Both, Flipkart and Amazon are flushed with revenue, so inspite of the shift in the ecomm policies and a denial in levying heavy discounts, these brands are actively looking towards driving profitability.
Not just discounts, the values on exchanging products online too has reduced, along with the offer of instant bank discounts. Amazon offered an additional 10% instant bank discount on a total purchase of Rs.3000 in its sale last week, while for Flipkart’s online sale price is Rs 4,999, which last year was Rs. 2500.
The Happy Days for Offline Retailers:
With such restrictions on online retailers, the best ones to be benefited are online retailers and small lobby owners. If this scenario continues with the advent of another government elected this year as well, the online discounting on smartphones will obviously come down, especially during the Diwali season. This will give a golden platter and opportunity to the offline brick and mortar mobile stores, to boost their sales.(source)
Tranding Tweets on Flipkart and Amazon are changing discount rules-
— Times of India (@timesofindia) July 10, 2019
— BCMenon (@balpallavi) July 10, 2019