On Feb. 1, new eCommerce rules in India began limiting what online retailers like Amazon and Flipkart can sell in the country. Now, Reuters is reporting that Amazon’s grocery service is active again, but it’s off to a slow start.
The eCommerce rules block companies from selling items through vendors in which they have an equity interest, which forced Amazon to remove hundreds of thousands of products from its website in India.
The policy has been fairly disruptive, as Amazon and its rival, Walmart-owned Flipkart, have had to completely alter their business practices in the country.
On Tuesday (Feb. 5), Amazon Pantry was offering cookies and tea in Mumbai and New Delhi, but numerous customers on Twitter were complaining that they had problems getting orders fulfilled.
India first let Amazon begin selling retail products in 2017, and the company spent $500 million as an investment.
Now, some of the products are being sold via sellers in which Amazon does not have an equity stake, which makes them compliant under the new rules.
However, both Amazon and Walmart are heavily affected by the new regulations. Morgan Stanley said the rules are going to raise business costs and decrease certainty over losses. Last year, Walmart paid $16 billion to purchase 77 percent of Flipkart.
Morgan Stanley also said it might make sense for Walmart to walk away from India if there are no paths to making money.
Some investors say the policy is too sudden of a change and creates uncertainty in the ecosystem of the marketplace.
“Frequent policy changes make the whole ecosystem nervous,” said Rajat Tandon, president of the Indian Venture Capital Association.
Smaller traders, however, have praised the new rules. They were the ones who complained about how Amazon and Flipkart used giant inventories and control over vendors to create an unfair marketplace.
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