Ebay plans to re-enter India despite new ecommerce FDI policy

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eBay chief executive officer Devin Wenig said the US online marketplace will re-enter India amidst the government’s latest foreign direct investment (FDI) guidelines on e-commerce companies.

“There won’t be one or two parties that make up the entirety of the Indian ecommerce opportunity and we certainly intend to have a share of it,” Wenig said at an investors call on Wednesday. He was responding to a query on whether there is a new window for eBay in India after the new foreign direct investment policy. 

“There are multiple opportunities; there are other parties that have approached us about potential collaboration. We will see how that goes. I think the Indian market is still in its early phases. There is plenty of growth left,” Wenig told analysts.

In December last year, the government tightened norms for FDI-funded e-commerce companies including Flipkart and Amazon and said such entities cannot exercise ownership or control over inventory. They must provide services such as warehousing, logistics and advertising to all sellers in a fair manner. It also disallowed e-commerce companies from entering into pacts for exclusive sale of products and from holding equity stakes in their sellers. The new FDI norms are due to take effect from February 1.

eBay entered the country in 2004 and began operations by acquiring bazee.com. In 2017, Flipkart bought eBay India and shut its operations in the middle of 2018 which also terminated Flipkart’s licence to use eBay.in brand.

Experts feel eBay’s relaunch is among the hundreds of online marketplaces that could enter India’s online market, especially ones that suffered or shut shop due to the deep discounting strategy offered by heavily funded online platforms.

“If the government allows a level playing-field and new guidelines are implemented strictly, there will be a plethora of startups who had buckled due to cash burn that will get into online retailing,” Kumar Rajagopalan, chief executive officer of the Retailers Association of India (RAI), said. “There will be a resurgence of two types of players – pure play marketplaces such as eBay and sellers who have been competing with online companies instead of other vendors in the same marketplace.”

Unlike Flipkart and Amazon that have holding companies in wholesale and retail operations as well as indirect investments in other retailers and brands, eBay followed a pure-play marketplace model and gained just from transaction, advertising and listing fees from sellers. 

Last year, eBay had hinted it will start India operations with Indian sellers selling on other marketplace platforms around the world followed by reintroduction of India-focussed portal.

The American online firm on Wednesday said it has already started an Indian website on New Year’s Eve where merchandise can be shipped from the US. “So the export business is live, the domestic buying experiences are live and the next phase will be the domestic selling experience,” added Wenig.

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