Walmart-owned Flipkart and Amazon have initiated talks with leading brands on ways to deal with the proposed goods and services tax (GST) reduction. The ecommerce marketplaces believe lower taxes could dent demand in the transitory phase as consumers may wait for prices to fall, especially for high-value goods like electronics, industry executives said.
The marketplaces are particularly concerned about the impact on their upcoming flagship festive sales, their most crucial annual sales event. This sale happens ahead of the Navratri festival when the new GST rates are unlikely to come into effect, the executives said.
The GST Council is likely to meet in the third week of September to finalise the new GST rates and the date of implementation.
A group of ministers on GST rate rationalisation on Thursday approved the Centre's proposal to eliminate the 12% and 28% slabs, consolidating the GST structure into two rates-5% and 18%. A higher levy of 40% GST could be levied on sin products like alcohol, tobacco, and some luxury goods.
While executives said Flipkart's Big Billion Days and Amazon's Great Indian Festival will happen as per schedule in September to ensure their month-long sales calendar is not impacted, the platforms told brands to be prepared for a late surge in sales in October in the second and third leg of their festive sales. The sales are likely to start around September 16-19.
Brands have also been asked to keep sufficient inventory ready in case the GST rate cut is effective earlier than expected, which would lead to a demand spurt as prices would fall by at least 8-9%, the executives said.
Amazon and Flipkart did not respond to email queries.
Avneet Singh Marwah, chief executive at online-focused TV manufacturer Super Plastronics said the ecommerce platforms do not want to postpone their flagship festive sales. The company is licensed to sell brands such as Kodak, Thomson, and Blaupunkt.
"We fear consumers may postpone their purchases which may impact the first leg of the sale, but with the expectation that the GST rates will be cut by early October before Diwali it should be compensated then. The platforms have asked brands to keep sufficient stock for a late pick up," said Marwah.
The first sale of the ecommerce platforms around Navratri is the largest business period for online platforms in India, contributing 40-50% of the total festive ecommerce business.
Discounts also tend to be the highest during this sale.
Varun Gupta, cofounder at wearable and hearable brand GoBoult, said the company has already produced and supplied the festive inventory to its partners in Amazon and Flipkart. He said the sales are happening as per plans though a GST rate cut may further boost demand. Around 80% of the brand's revenue comes from ecommerce.
The marketplaces are particularly concerned about the impact on their upcoming flagship festive sales, their most crucial annual sales event. This sale happens ahead of the Navratri festival when the new GST rates are unlikely to come into effect, the executives said.
The GST Council is likely to meet in the third week of September to finalise the new GST rates and the date of implementation.
A group of ministers on GST rate rationalisation on Thursday approved the Centre's proposal to eliminate the 12% and 28% slabs, consolidating the GST structure into two rates-5% and 18%. A higher levy of 40% GST could be levied on sin products like alcohol, tobacco, and some luxury goods.
While executives said Flipkart's Big Billion Days and Amazon's Great Indian Festival will happen as per schedule in September to ensure their month-long sales calendar is not impacted, the platforms told brands to be prepared for a late surge in sales in October in the second and third leg of their festive sales. The sales are likely to start around September 16-19.
Brands have also been asked to keep sufficient inventory ready in case the GST rate cut is effective earlier than expected, which would lead to a demand spurt as prices would fall by at least 8-9%, the executives said.
Amazon and Flipkart did not respond to email queries.
Avneet Singh Marwah, chief executive at online-focused TV manufacturer Super Plastronics said the ecommerce platforms do not want to postpone their flagship festive sales. The company is licensed to sell brands such as Kodak, Thomson, and Blaupunkt.
"We fear consumers may postpone their purchases which may impact the first leg of the sale, but with the expectation that the GST rates will be cut by early October before Diwali it should be compensated then. The platforms have asked brands to keep sufficient stock for a late pick up," said Marwah.
The first sale of the ecommerce platforms around Navratri is the largest business period for online platforms in India, contributing 40-50% of the total festive ecommerce business.
Discounts also tend to be the highest during this sale.
Varun Gupta, cofounder at wearable and hearable brand GoBoult, said the company has already produced and supplied the festive inventory to its partners in Amazon and Flipkart. He said the sales are happening as per plans though a GST rate cut may further boost demand. Around 80% of the brand's revenue comes from ecommerce.
