This move comes to avoid serious penalties on the lines of new e-commerce regulations.
Flipkart, Amazon India and Snapdeal, the largest e-commerce retailers have suspended their sales temporarily in order to comply with new e-commerce regulations which bans marketplaces from influencing prices, says a Mint report.
According to the report, the three e-commerce firms continue to fund discounts given by third-party sellers but have decided to abort planned sale events accompanied by advertisements in order to avoid any kind of penalty from regulators.
Flipkart reportedly has cancelled its app-only sale during the first week of May. Amazon and Snapdeal have also shelved their one-day sale event of offering extensive discounts on products across categories.
Flipkart, Amazon India and Snapdeal are currently formulating newer ways to fund discounts and to advertise their sales. They intend to be ready with dynamic means and advertising messages when the festive season starts in August and ends in October, after Diwali, says the report.
The report quotes a source saying, e-commerce retailers do not intend to come into the radar of regulators and offline retailers. The government recently announced new regulations and it will be extremely embarrassing if online retailers ignore that. Hence in order to avoid infuriating regulators, the three e-commerce giants have decided to keep sale events and their advertising on hold and instead gear up for the festive season.
While Flipkart, Amazon India and Snapdeal are discontinuing their sales, Flipkart-owned fashion retailer, Myntra will continue with its three-day long app-based sale in May. Unlike the three e-commerce firms, Myntra has Vector E-commerce Pvt. Ltd as one seller which makes management of sales easier for Myntra, says the Mint report.
In March, the government gave a partial fillip to the e-commerce sector by permitting 100% foreign direct investment (FDI) under the automatic route for retail trading, in the marketplace model of e-commerce. The government added riders that an e-commerce firm will not be permitted to sell more than 25% of total sales from one vendor or its group companies. Another being, the firms cannot influence the pricing of products and services.
In India, the online retail market has seen a rush of business from venture capital firms and investors where more than $9 billion was invested in online marketplaces. A major part of this investment is spent on advertising and discounts.
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