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Are Modi Govt's Restrictions Delaying Alibaba's Invasion in India?

Are Modi Govt's Restrictions Delaying Alibaba's Invasion in India?
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You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Amazon and eBay aren’t the only ones that have the budget and plans to completely penetrate India’s e-commerce market. The world’s largest wholesale giant, Alibaba is stuck between government’s hupla-loop and red-tapism. Newly revised government policies are restricting their business model, thus preventing a proper launch. Allegedly, Press Note 3, which marks the rules for e-commerce players, issued by the Department of Industrial Policy and Promotion is the reason keeping Alibaba away. The policy states that online marketplaces cannot influence prices, a guideline Amazon India isn't really happy about either. This essentially means that Alibaba would have to forcibly match market rates of its products, thus defeating the purpose of shopping via Alibaba in the first place.

While supporters of the policy argue that it stands to provide a level playing field to all competitors, including local ans small scale retailers. It also needs to understand India’s obsession with cash-on delivery, wqhich is a daunting task for goods sold from China. The courier and shipping may cost more than the goods itself for an exchange, thus making returns, cash refunds, or customer support redressal virtually impossible. Financially it wouldn’t make sense to even include a guarantee on products; because knowing the customer cannot make a feasible transaction to send it back, dealers in China have a reason to sell cheaper goods.

Alibaba has already invested a lot into Indian e-commerce giants including Snapdeal and PayTM. However, if Alibaba replicates a similar mechanism like that in place in China, the market changes can be phenomenal. On an average, prices on Alibaba range from 40-90% of products. While its certainly easier to find replicas, copies, identical clones and very high (or cheap) quality duplicates of products, original resellers and manufacturers also exist. Alibaba’s huge database includes manufacturing equipment for giant marketers including LG, Samsung, Sony and their likes. By ordering in bulk, you can save unimaginable amounts of money.

To put things into perspective, on a special sale day, you might be able to get a flash-drive of 64GB for about 1000 rupees on PayTM, Snapdeal or Flipkart. No matter how many you order, the price will remain about the same. Even if you’re lucky to score from one of those billion sales days on either of these platforms, the price wouldn’t drop down to something like 500. However, with the correct bargaining skills, you can buy a similar working good quality flash-drive of 64GB for around 100 rupees! And usually bulk orders don’t have to be any number above 10-20, depending on the seller and the good.

Have you tried Alibaba for anything yet? What changes do you think it will bring with its drastically cheaper prices? Let us know in the comments on our official Facebook page Entrepreneur India

Edition: December 2016

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