Govt now says Flipkart and Amazon can sell own private labels
04 Jan 2019
Days after the government barred FDI-backed e-commerce firms from selling own brands, the Department of Industrial Policy and Promotion (DIPP) once again clarified on the e-commerce policy saying that e-commerce firms like Flipkart and Amazon can sell private label products.
In its e-commerce policy note released on 26 December 2018, the government had barred marketplace e-commerce companies from selling products under a private label owned by them.
Private labels are unique brand names used by a firm to sell products which are similar to those of established brands but at lower prices. These private labels are generally more profitable for the firm and lead to better margins.
“Physical retailers also have private labels. It is a legitimate business practice. There is no reason to single out e-commerce firms. It is not a publicly held firm, so they have every right to have a run with their business plans. Let the Competition Commission of India look into any issues, if there are any,” said Arvind Singhal, of Technopak Advisors.
But the problem with private labels is that e-commerce firms would start importing such products if found more lucrative, which will be to the detriment of local producers.
“The new press note is explicit. E-commerce companies with FDI can’t sell their own goods, which means private labels are not allowed. The new clarification note is a simple stupid confusion or losing guts and backtracking,” said CAIT national secretary general Praveen Khandelwal.