Amazon pipped Snapdeal to become India's second-largest e-retail player in terms of shipment numbers in March 2016, and Mint believes it was Amazon's deep pockets that enabled it to offer better discounts. A recent FDI regulation that prevents online marketplaces from influencing prices by way of discounts could now be beneficial to Flipkart and Snapdeal, allowing them to regain their market share from Amazon.
Experts believe Amazon has the potential to displace Flipkart, which currently ranks No. 1 in shipments, but the regulation change, which resulted in online retail platforms suspending their planned sale events, could level the playing field, giving Flipkart and Snapdeal time to catch up with Amazon.
Flipkart and Snapdeal are reportedly feeling the pinch when it comes to funds. Another Mint report says that the home-grown online marketplace players were finding it hard to get investors to pump in investments at their current valuations. They are reportedly requesting sellers to offer discounts from their end as well. On the other hand, Amazon has stepped up its capital spending, nearly doubling its valuation to Rs. 16,000 crore, Mint reported.
While Amazon is apparently holding back on its advertising and discount-driven sales at the moment, it is looking for a workaround.
Mint reported that the government's decision to suspend price-influencing was to level the playing field, giving brick-and-mortar retailers a chance. "E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field," the Department of Industrial Policy and Promotion said on March 29. However, this move seems to have benefitted the local e-tailers as well.