Amazon pulls numerous products from India website as new e-commerce rules bite

A shipment moves on a conveyor belt at an Amazon Fulfillment Center (BLR7) on the outskirts of Bengaluru, India. (File Photo/Reuters)
Updated 01 February 2019
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Amazon pulls numerous products from India website as new e-commerce rules bite

NEW DELHI/MUMBAI: E-commerce rules that went into effect in India on Friday caused widespread disruption for Amazon.com, forcing it to take down an array of items from its India website including Echo speakers, batteries and floor cleaners.
Two sources with direct knowledge of the matter said the products began to disappear from the Amazon India website late on Thursday as it began complying with the revised norms before a midnight deadline.
“The company has no choice, they are fulfilling a compliance requirement ... customers will suffer,” said one of the sources.
In December, India modified foreign direct investment (FDI) rules for its burgeoning e-commerce sector, which has drawn major bets from not only Amazon.com but also the likes of Walmart Inc, which last year bought a majority stake in homegrown e-commerce player Flipkart.
India’s new e-commerce investment rules bar online retailers from selling products via vendors in which they have an equity interest, and also from making deals with sellers to sell exclusively on their platforms.
By Thursday, numerous items sold by vendors such as Cloudtail, in which Amazon holds an indirect equity stake, were no longer available on the Amazon India site.
Clothing from Indian department store chain Shopper’s Stop was also no longer available, as Amazon owns 5 percent of the company.
Amazon’s own range of Echo speakers, its Presto-branded home cleaning goods and other Amazon Basics products such as chargers and batteries had also vanished from the website.
Both Amazon and Walmart had lobbied against the latest rules and pushed for a delay in their implementation, but India late on Thursday said the deadline stood.
The situation in India is “a bit fluid right now,” but the country remains a good long-term opportunity, Amazon Chief Financial Officer Brian Olsavsky said on a conference call with reporters following its fourth-quarter earnings announcement.
The company’s main goal is to minimize the impact of the new e-commerce rules on customers and sellers, he added.
Amazon, which saw record sales and profit during the holiday season, has forecast first-quarter sales below Wall Street estimates due to the uncertainty in India — one of its key growth markets.
Flipkart CEO Kalyan Krishnamurthy warned last month that it faces “significant customer disruption” if the implementation of the new rules were not delayed.
On Friday, Flipkart said it was disappointed the government had decided to implement the regulations in haste, adding, however, that it would do everything to be compliant.
“We believe that policy should be created in a consultative, market-driven manner and we will continue to work with the government to promote fair, pro-growth policies,” Rajneesh Kumar, senior vice president & chief of corporate affairs, said in a statement.
GROWTH DRIVER
The US government has also urged India to protect the investments of the two American retailers, Reuters reported last week.
Both companies have bet heavily on India being a big growth driver: Amazon has committed to investing $5.5 billion there, while Walmart last year spent $16 billion on Flipkart.
But Indian Prime Minister Narendra Modi’s administration is seen as keen to appease small traders in the run-up to a general election due by May.
Many small traders say the e-commerce giants use their buying power and control over inventory from affiliated vendors to create an unfair marketplace where they can offer deep discounts on some products.
Such arrangements will be barred under the new policy.
Industry sources have said the new rules will force the big e-sellers to change their business structures, and will raise compliance costs.
Amazon India told Reuters it was “committed to remaining compliant to all the laws of the land,” adding that all sellers make their own independent decisions of what to list and when.
Exclusive deals with sellers will be discontinued, the two sources said.
It is unclear how long the disruption will last. Would-be buyers of Echo speakers on Amazon India saw a message reading: “We don’t know when or if this item will be back in stock.”
The impact of the changes on Flipkart was not clear.


Oil prices near 2019 highs after US ends all Iran sanction exemptions

Updated 18 min 20 sec ago
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Oil prices near 2019 highs after US ends all Iran sanction exemptions

  • Iran’s main oil buyers initially received sanction exemptions
  • US reiterates its goal to cut Iran oil exports to zero

SINGAPORE: Oil prices were near 2019 highs on Tuesday after Washington announced all Iran sanction waivers would end by May, pressuring importers to stop buying from Tehran.
Brent crude futures were at $74.40 per barrel at 0239 GMT, up 0.5 percent from their last close and not far off a 2019 peak of $74.52 reached on Monday.
US West Texas Intermediate (WTI) crude futures hit their highest level since October 2018 at $65.95 per barrel before edging back to $65.89 by 0239 GMT, which was still up 0.5 percent from their last settlement.
The United States on Monday demanded that buyers of Iranian oil stop purchases by May 1 or face sanctions, ending six months of waivers which allowed Iran’s eight biggest buyers, most of them in Asia, to continue importing limited volumes.
Before the reimposition of sanctions last year, Iran was the fourth-largest producer among the Organization of the Petroleum Exporting Countries (OPEC) at almost 3 million barrels per day (bpd), but April exports have shrunk well below 1 million bpd, according to ship tracking and analyst data in Refinitiv.
Barclay’s bank said in a note following the announcement that the decision took many market participants by surprise and that the move would “lead to a significant tightening of oil markets.”
The British bank added that Washington’s target to cut Iran oil exports to zero posed a “material upside risk to our current $70 per barrel average price forecast for Brent this year, compared with the year-to-date average of $65 per barrel.”
ANZ bank said in a note on Tuesday that “the decision is likely to worsen the ongoing supply woes being felt with Venezuelan sanctions, the OPEC supply cut, and intensifying conflict in Libya.”
The move to tighten Iran sanctions comes amid other sanctions Washington has placed on Venezuela’s oil exports and also as producer club OPEC has led supply cuts since the start of the year aimed at tightening global oil markets and propping up crude prices.
Ellen Wald, non-resident senior fellow at the Global Energy Center of the Atlantic Council, said the United States “seem to expect” Saudi Arabia and the United Arab Emirates to replace the Iranian oil, but she added “that this is not necessarily the way Saudi Arabia sees it.”
Saudi Arabia is the world’s biggest exporter of crude oil and OPEC’s de-facto leader. The group is set to meet in June to discuss its output policy.
“Should OPEC decide to end their supply cut program going into the second half of the year, this could limit oil’s upside in the coming months,” said Lukman Otunuga, analyst at futures brokerage FXTM.
Meanwhile, the Atlantic Council said the US move would hurt Iranian citizens.
“We’re going to see their currency collapse more, more unemployment, more inflation,” said Barbara Slavin, director for the Future of Iran Initiative at the Atlantic Council, adding that the US sanctions were “not going to bring Iran back to the (nuclear) negotiating table.”