by Apparel Resources News-Desk
02-February-2019 | 2 mins read
US-based retail giants Amazon and Walmart lost a sum of over US $ 50 billion in market capitalisation after the government’s revised FDI policy for e-commerce came into effect.
Both the companies had made big bets on the Indian retail market with Amazon committing US $ 5 billion in the country while Walmart has spent US $ 16 million last year in order to buy a controlling stake in Flipkart.
Nasdaq-listed Amazon’s shares fell by 5.38% to US $ 1626.23, losing US $ 45.22 billion in market capitalisation. Walmart’s share price fell by 2.06% to US $ 93.86 on NYSE, losing US $ 5.7 billion in market capitalisation. At the close of trade on Friday in the US, Amazon was valued at US $ 795.18 billion while Walmart was at US $ 272.69 billion.
However, part of Amazon’s share fall was driven by its plans to increase spending not related to India. The firm also reported its fourth quarter results on Thursday.
Amazon’s International net sales grew by 15% to US $ 20.83 billion during the quarter ending December 2018, as compared to a 29% growth in the year-ago period. The e-commerce major was able to narrow its international losses by 30% to US $ 642 million for the quarter, from US $ 919 million the same period last year.
Meanwhile, Flipkart maintained that it was ‘disappointed’ about the government’s decision to not delay the implementation of the revised FDI policy for e-commerce for the businesses to be restructured.
Amazon has said that it will engage with the government for further clarifications to minimize the impact on its customers and sellers.
Amazon and Flipkart account for about 75-80% of India’s online retail business and rely on a number of large sellers for a majority of sales.
The revised policy said that online firms cannot hold a stake in seller entities that sell on their marketplace, which cause Amazon India to remove and array of products from its website overnight. According to the rules, the e-tailers also need to ensure that they do not source over 25% of a seller’s gross sale through wholesale units like Flipkart India Private Limited and Amazon Wholesale.