No More Flash Sales On E-Commerce Websites, States Indian Government

In a recent move, the Indian government has proposed a potential ban on flash sales on e-commerce websites. The government has stated that the e-commerce portals and their affiliate entities should not be listed on their platforms as sellers. In a proposal related to tightening of rules, it is believed that Amazon and Flipkart, which is owned by Walmart will face the brunt.

As per rules by the Ministry of Consumer Affairs released in a government statement, there were complaints from brick-and-mortar retailers that the e-commerce giants from foreign companies bypass the Indian laws using intricate business structures. On the contrary, Amazon and Flipkart claim that they comply with the Indian laws.

No More Flash Sales

Under the strict proposals issued by the government, the e-commerce companies should not host flash sales in the country. The flash sales pattern is quite popular during the festive season but has attracted the anger from offline retailers as the latter cannot give deep discounts as their online counterparts.

Also, it states that the e-commerce firms should ensure that none of the associated enterprises and related parties are listed as sellers on their websites. The retailed entity should not sell goods to an online retailer operating on the same platform. These changes are sure to leave an impact on the business structure of Flipkart and Amazon at a time when e-commerce industry in India is booming rapidly.

Furthermore, it has been stated that foreign e-commerce players should not make direct sales to consumers. These companies have to only operate a platform for sellers to connect to consumers. Notably, Flipkart and Amazon are also regulated under the foreign investment rules for e-commerce in India. It remains to be seen if the proposed consumer ministry rules will supersede the investment rules or not.

Notably, the proposal is applicable to both Indian and foreign e-commerce companies and is open for public consultation until July 6, stated the Indian government. While this has created ripples in the e-commerce industry, Amazon and Flipkart are already battling with the federal antitrust watchdog in the court to stall investigation in their business practices.