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Slow clearance of Chinese goods may put etailers like Amazon, Flipkart in a spot

India’s move to delay Customs clearance for goods, components and raw materials imported from China could hurt companies like Flipkart, Amazon, Snapdeal and Paytm Mall, as it puts at risk categories that contribute over 50% of sales on these ecommerce

Last Updated: Jun 24, 2020, 08.21 AM IST
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Apart from smartphones — which is the largest sales driver for online retailers — consumer electronics, personal care, home and furnishing and toys, which rely highly on supply chains from China, will be impacted.
Bengaluru: India’s move to delay Customs clearance for goods, components and raw materials imported from China could hurt companies like Flipkart, Amazon, Snapdeal and Paytm Mall, as it puts at risk categories that contribute over 50% of sales on these ecommerce platforms.

Apart from smartphones — which is the largest sales driver for online retailers — consumer electronics, personal care, home and furnishing and toys, which rely highly on supply chains from China, will be impacted.

As per the gross merchandise value (GMV) data for 2019, these categories make up 51% of sales for the Indian ecommerce industry, according to a sectoral analyst who did not want to be named, although he clarified that the curbs on supply will not wipe out China-made products from these categories. Of the online GMV, smartphones make up around 35%, consumer electronics 7%, home and furniture 4% and toys form 2%.

Social commerce companies such as Meesho, Shop101, Bulbul and Simsim are more dependent on long-tail affordable items from China. “At least 60-70% of the merchandise priced below ₹300 comes from China. India doesn’t have the kind of cost capabilities to manufacture items at that price,” said an investor in a social commerce startup.

“This supply blockage will affect overall retail and not just ecommerce. But the reliance of ecommerce on some of these categories, specifically smartphones, to drive sales is higher than in offline retail,” the analyst quoted earlier in the story said.

Senior executives from ecommerce marketplaces told ET that the move to curb supplies from China will hurt local retailers, as many of these products, components or raw materials cannot be locally sourced, either due to non-availability or lack of scale.

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