Baba Ramdev-promoted Patanjali Ayurved has said the government’s revised ecommerce policy on foreign direct investment (FDI) which was rolled out on February 1 this year “will help to create a level-playing field for all retail platforms, and encourage fair and healthy competition among them”, one year after it inked extensive partnerships with leading e-retailers including Amazon, Flipkart and Paytm Mall to push its products online.
“In our view, an environment of equal opportunity is needed for all trade and retail platforms as organised trade and retail is at their early stages in India,” Patanjali Ayurved spokesperson SK Tijarawala said.
At the time of collaborating with e-commerce companies, Baba Ramdev had said the company will reach out to more people including the youth who prefer and use online platforms for shopping more these days.
Patanjali, seen as the biggest disruptor in recent times in the fast-moving consumer goods (FMCG) space, which forced established companies such as HUL and Colgate-Palmolive to launch herbal-ayurvedic products, reported standalone consumer goods revenues of Rs 8,148 crore in the year ended March 2018, according to a report by Care Ratings.
The report said Patanjali was unable to adapt in time to the goods and services tax regime and develop infrastructure and supply chain. Online sales now contribute 12-15% to Patanjali’s turnover.
Besides Amazon, Flipkart and Paytm Mall, Patanjali had announced tie-ups with BigBasket, Grofers, netmeds, 1mg and Shopclues.
Grocery brands see one of the highest discounting online, and many companies had raised concerns that the revised e-commerce policy which seeks to stop cashback and deep discounting on marketplaces, would slow down growth.
After about one week, Amazon Pantry resumed sales in select markets through Amazon Retail India for selling grocery and daily essentials including staples, biscuits and instant noodles, with discounts. This follows the government’s clarification that companies with FDI can continue to sell through ecommerce.
The contribution of ecommerce to overall FMCG sales is expected to be 11% by 2030, according to market research firm Nielsen, up from 1.3% now. Nielsen said in a report late last year that over the next 12 years, ecommerce would be 11% of FMCG sales, an 8X growth from its current size.
On February 1, the government had tightened norms for ecommerce firms having foreign investments, disallowing online marketplaces including Amazon and Walmart-owned Flipkart from selling products of companies of which they are their subsidiaries, besides banning them from entering into exclusive partnerships which it said leads to “influencing prices”.
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