Amazon Faces Regulatory Trouble In India

Amazon might have breached the Indian e-commerce regulations

If there is any company with a globalizing strategy, it is Amazon. The American online retailer has achieved growth at a quick speed in the past several months, adding live entertainment and own aircraft fleet and fashion products to its ever growing empire

Now, the Seattle-based company has hit an unanticipated regulatory hurdle in its huge market — India. Recently, the American e-commerce company might be in violation of some of the online e-commerce regulations of the country. In late March, officials of the Indian government implemented new rules to pricing and sales sources without issuing no or little warning, which indicates that the organization and other similar websites are not presently compliant.

Amongst the new regulations includes a condition that no single merchant can contribute to over 25% of sales in an online market. This is a big problem for the company whose topmost seller contributes from 40% to 50% of sales in the region. The bigger difficultly at hand, nevertheless, would seem the lack of time Amazon has been provided to adjust in accordance to the new regulations of the state.

Third party analysts look frustrated due to the ways used by the Indian government to implement its new law. The e-commerce market of the country, nevertheless, is not one that any web retailer can give up. Forrester Research suggests that in the region, online spending could rise up to a sum of $75 billion after four years, over six times the spending done by Indians in 2015, which was $12.1 billion.

With the larger portion of more than a billion population of the region gaining access to the web, it is just a matter of time before e-commerce really grows in the state. This is what makes the region too much important for the US organization. The company has hit the regulatory obstacle at time when its Japanese competitor, Rakuten, which is also an online retailer, entered the Indian market by not only setting up a business office in the country but by also looking to hire mid-level managers from Amazon and Flipkart for establishing a web retail platform in the country.

Economic Times reported that the new entrant in the market also owns the chat app, Viber. Similarly, Alibaba, which has supported domestic online trading organizations, aims to directly enter the country’s market in 2015.

As promising as the e-commerce marketplace of the country looks, it won’t be easy for the Tokyo-based organization or any other entrant to establish its presence in the region as topmost players like Snapdeal, Flipkart and Amazon lead the e-commerce industry of India, each with gross sales in billions of dollars.