Nobody hates Indian eCommerce like Ebay does!

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Nobody hates Indian eCommerce like Ebay does!
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If Kishore Biyani would have been reading this, he could have felt utterly happy. With weekend bringing happiness, retail merchants irritated at the business model of ecommerce have much more a reason to rejoice.

As per a news report in The Economic Times, brick-and-mortar retailers questioning the modalities of foreign funded ecommerce marketplaces in India are finding an unlikely backer - American ecommerce firm eBay Inc that also operates a marketplace in India.

"There is confusion and the government needs to look at it. Companies that have their own logistics and warehouses, can they be classified as marketplaces?" Latif Nathani, managing director at eBay India told the ET. He alluded to rival Amazon and homegrown but foreign-owned marketplaces Flipkart and Snapdeal.

Over the weeks, India's brick-and-mortar retailers have stepped up their campaign against the country's nascent but aggressive breed of online retailers that are accused of hurting traditional retailers with their heavy discounting strategies.

Retailers Association of India, the lobby group of companies including Future Group, Reliance Retail and Shoppers Stop, have even petitioned against the government in the Delhi High Court pleading non-parity in India's foreign investment rules between physical retailers and online retailers that have attracted billions of dollar under the marketplace model.
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Although India bars FDI in ecommerce selling to consumers, it allows fully-owned foreign subsidiaries under the marketplace model to play facilitators for sellers and buyers.

Brick-and-mortar players argue that online rivals such as Amazon, Flipkart and Snapdeal are holding inventories through warehousing and logistics operations, and that amounts to retailing.

"Virtual retailers, like real retailers, store most of their merchandise or inventories in their own warehouses," Kishore Biyani, chief executive of the Future Group, the country's largest listed retail group, told the ET earlier this week. "How one treats this inventory in the financial accounts may differ. Some account this inventory on their own balance sheet, others account for it in their suppliers' balance sheet. There are realworld retailers as well who do not account for the inventory on their own books," he said.

eBay's Nathani supports the argument. "I completely understand and agree with Mr Biyani as there needs to be more clarity on what a marketplace is and define it," he said. "Mr Biyani's concern is that marketplaces are having warehouses and courier companies and supplies of sellers are staying in their warehouses. Is that a proper definition of a marketplace or is that a stretched definition?"

Without naming any company, Nathani said there is a foreign-funded marketplace operator whose subsidiary accounts for 80% of the products sold on its platform. Snapdeal declined to comment while Amazon and Flipkart did not respond to e-mails seeking comments as of press time Thursday.
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Coincidentally, eBay owns a minority stake in Snapdeal. "Look at Uber. Now, that is a marketplace as they don't own cars and they don't have the drivers as their employees," Nathani said, referring to the appbased taxi hailing US company. "Now, for example, if they were to start owning some of the cars and some of the drivers on their rolls as employees, would they be classified as a marketplace?" He said eBay is a "pure marketplace" as it neither owns warehouses nor holds any inventory on sellers' behalf.
Since many months, the online retailers have been blamed from many quarters. But this time, when the blame game is hit from online player, its something to be taken into account.

(Image: Reuters)