Customers feel the pinch as govt implements new FDI guidelines for e-tailers: Survey

Customers were offered lesser discounts on e-commerce sites such as Amazon and Flipkart in the first week of February after the government implemented the revised foreign direct investment (FDI) guidelines for the e-tailers on February 1.

According to a survey which was conducted by Local Circles, a community media platform that hosts various startups and SMEs, 25 percent of the respondents said that price of the products including shipping costs were higher by over 25 percent during the period.

Around 50 percent of the consumers said that they found lower discounts as compared to the earlier days.

The survey was conducted among 10,500 individuals across 60 cities in India.  It included 61 percent male and 39 percent female participants.

Customers also said that even the delivery timing and availability of the products suffered post the implementation of the new FDI rules.

Around 36 percent of the respondents said that the companies promised up to or more than twice the delivery time.

Multiple products were also missing from the websites. About 20 percent of the consumers surveyed said that they were unable to find the products they typically order from e-commerce sites.

Press Note 2, which was implemented on February 1, bars e-commerce companies from influencing the price of the goods. It was brought to protect the interests of small, local businessmen who accused online portals of stealing their business through predatory pricing and heavy discounts.

E-commerce companies such as Walmart-owned Flipkart and US-based Amazon had been demanding an extension of the deadline stating that the regulation required extensive overhauling of their business model.

But given the pressure from the offline retailers associations ahead of the elections, the government refused to extend the deadline.

While Amazon has asked for time till June, Flipkart has sought six more months.

Now the new norms make it difficult for the e-commerce companies fund discounts, do exclusive tie-ups and do business via group companies on their platforms.