Amazon Pulls Numerous Products from India Website as New eCommerce Rules Bite

E-commerce rules that went into effect in India on Friday caused widespread disruption for Amazon.com, forcing it to take down an array of items from its India site including Echo speakers, speakers, and floor cleaners. Two sources with direct knowledge of the matter said the products started to disappear from the Amazon India site late on Thursday since it started complying with the revised norms before a midnight deadline. 

“The company does not have any choice, they are meeting a compliance requirement… clients will suffer,” said one of those resources. In December, India modified foreign direct investment (FDI) principles for its own founding e-commerce sector, which has drawn major bets from not only Amazon.com but also the likes of Walmart Inc, which last year bought a majority stake in homegrown e-commerce player Flipkart. India’s new e-commerce investment principles bar online retailers from selling goods via vendors where they have an equity interest and from making deals with vendors to sell exclusively on their own platforms. 

By Thursday, numerous items sold by vendors such as Cloudtail, in which Amazon retains an indirect equity stake, were no longer on the Amazon India website. Clothing from Indian department store chain Shopper’s Stop was no longer available, as Amazon owns 5% of the company. Amazon’s own range of Echo speakers, its own Presto-branded home cleaning products along with other Amazon Basics products such as chargers and batteries had also disappeared from the site. 

Both Amazon and Walmart had lobbied against the latest principles and pushed for a delay in their execution, but India late on Thursday said the deadline stood. The situation in India is”a little fluid at this time,” however, the nation remains a fantastic long-term opportunity, Amazon Chief Financial Officer Brian Olsavsky said on a conference call with reporters following its fourth-quarter earnings statement. 

The company’s main objective is to decrease the effect of the new e-commerce principles on customers and sellers, he added. Amazon, which saw record sales and profit during the holiday season, has prediction first-quarter earnings below Wall Street estimates as a result of uncertainty in India – one of its key growth markets. Flipkart CEO Kalyan Krishnamurthy warned last month that it faces “major customer disturbance” if the implementation of these new rules weren’t delayed. 

On Friday, Flipkart said that it was frustrated that the government had decided to apply the regulations haste, including, however, it could do everything to be compliant. “We think that policy ought to be created at a consultative, market-driven fashion and we’re going to continue to work with the government to promote honest, pro-growth policies,” Rajneesh Kumar, senior vice president & chief of corporate affairs, said in a statement.