Marketplaces are already serving any seller who is willing to sell on their platforms. A lot of resources and investment goes into making a seller’s journey seamless and profitable. A lot of sellers are only ecom specific and have made money from this channel. If we dig down deep into what the regulations say, it’s quite odd and I am not sure how this has been drafted without a proper thought process.
For instance, the earlier notification said that a marketplace cannot have any vendor which sells 25% on its platform and the new one says that if the inventory of the vendor has more than 25% on a marketplace it will be deemed that the marketplace has control on the vendor. So the control has gone from the marketplace to the vendor in the new one also. Then the regulation goes on to say that apart from having control via inventory as described previously even if there is any equity holding of the marketplace in the vendor then again it will be deemed to be controlled and thus such a vendor cannot sell on the marketplace. The way to monitor 25% sales from vendor’s as well as marketplace’s perspective will be operationally very challenging. Another example is digital content cannot be sold. Then who will consume Netflix, Prime Video, Music, Kindle Unlimited etc. Will Netflix sell all their content to multiple Indian entities and then they will all sell on Netflix marketplace making sure 25% of the movies/series limit doesn’t overshoot.
The kind of infrastructure which has been built will simply be put to naught if the vendor equity holding clause is held. Walmart has 5 odd % of its value invested in Flipkart. Amazon has 0.2% in India as per publicly available news. Also suggest read Amazon’s 10k filings risk disclosures. Take for instance Netflix again, think why their payments are routed through outside India. Netflix has tremendous plans for India though. They will perhaps be in the doldrums too now.
I can draw a parallel to China. There is one beautiful thing which I noticed there. The regulators there let a fledgling industry grow, they don’t tinker and try to control things when the seed goes to an offshoot stage. It is almost like a ‘Hayek’ way of let the market figure it out. Only when there is ‘worth’ in the ecosystem created that it comes up with regulations. In our country its a little convoluted, we have this deep desire to ascertain our regulatory power right from the word go. If payments happen make a dozen regulations on how to curb ‘misuse’. There is no use from where will misuse happen! If a Whastapp makes payments seamless all the local companies jump up and start crying foul. At the end of the day we should be thinking Customer Backward and that is the core tenet on which businesses should work.
Alas, I know the question remains who is the ‘Customer’, is it truly the customer you and I or someone else.
p.s. I work for Amazon. All this is publicly available information and my personal opinion having seen the world of payments for almost a decade and the kind of rigorous regulations it has seen. Views are highly opinionated. Also I am invested in Dmart since IPO and RIL since I started investing.