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Last Updated : Feb 12, 2019 05:05 PM IST | Source: Moneycontrol.com

Revised FDI norms in e-commerce: Consumer durables firms go back to drawing board

At present, the online appliance market constitutes about 10 percent of the Rs 1 lakh crore white goods industry.

M Saraswathy @maamitalks

Appliance makers who were primarily selling their products online are now looking for alternate channels as the revised policy for foreign direct investment (FDI) in e-commerce companies has done away with deep discounts.

These norms came into effect from February 1 and are aimed at giving a level-playing field to all sellers. The policy has said that e-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field.

"Our products were more attractive online because of the pricing. Now we may no longer be allowed to do so. Hence, many exclusive online appliance brands have to spruce up retail presence. As standalone stores may not be sustainable, partnership with electronic retailers are being looked at," said the head of India distribution for a large Asian television brand.

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Those companies who have a sales presence (both online and offline) will not be affected as the store sales will continue as usual.

Rajendra J Gandhi, Chairman & Managing Director of kitchen appliance maker Stovekraft, said that the new FDI regulations, imposing equity and inventory restrictions on e-commerce platforms, is likely to have some impact on their e-commerce revenues, in the short-term.

"While the new regulations are meant to achieve level playing field in the market place, our endeavour is to ensure that, it is not at the cost of our end consumers. We are exploring alternative retail models and adding to our e-commerce market place and resellers, to augment and enhance our existing distribution network," he said.

At present, the online appliance market constitutes about 10 percent of the Rs 1 lakh crore white goods industry. These include more than 50 brands from across the world. The online-only brands have faced pressure from large appliance makers in terms of visibility in retail stores leading them to take the digital route to sales.

However, not everyone is immediately feeling the heat. Avneet Singh Marwah, CEO, SPPL (exclusive licensing partner of Thomson TV) said that as of now, things look the same. In fact, he said that they have seen an increase in sale in the first 10 days of February itself.

The guidelines state that e-commerce marketplace entity cannot mandate any seller to sell any product exclusively on its platform only. However, Marwah clarified that a seller can decide whether or not it wants to enter into an exclusive tie-up with an e-commerce company.

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First Published on Feb 12, 2019 04:56 pm
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