New Govt. Regulations To Prevent Discounts In E-Retail

The Indian online consumer has had a heady few years. Companies have mushroomed faster than he could keep track of them, and buoyed by VC funding, have gone all out to woo him – there have been discounts, offers, cashbacks, double cashbacks, sales, bonanza sales, and in odd instances, iPhones being sold for a dollar. The Indian consumer has reveled in this environment. He’s taken to e-commerce like a fish to the water, and big e-commerce players have attained some skyrocketing valuations. But if the government of India has its way, this party might end soon.

In a landmark directive, the Indian government has instructed that e-commerce entities will not entice users to their services through discounts. “Ecommerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field.”, says the ruling from Indian government’s Department of Industrial Policy and Promotion. 


This essentially means that discounts, which had become a feature of India’s e-commerce scene, could soon be a thing of the past. India’s biggest online retailers, Flipkart, Amazon and Snapdeal rely heavily on discounts for their revenues, and notch up some incredible numbers during their special sales.

This move will help offline retailers compete with their online counterparts, who had managed to give heavy discounts thanks to FDI regulations which permitted foreign investment in retail marketplaces like Flipkart. Brick-and-mortar retailers had complained that while online companies had access to foreign funds which enabled discounts, FDI was not allowed in offline retail. They had approached the Delhi High Court seeking a level playing field last year.

But is it too late? Has the Indian consumer grown too accustomed to the convenience of online shopping to go back to retail stores, or will his patronage of e-commerce companies last only as long as the discounts are lucrative? 

You can bet that the entire e-commerce industry is waiting with bated breath to find out.

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