Amazon has for years given preferential treatment to a small group of sellers on its platform in India, misrepresented its links to sellers and used them to circumvent increasingly stringent foreign investment rules affecting e-commerce, internal company documents show. from Reuters.
The documents, dated between 2012 and 2019, are reported here for the first time. They provide an inside look at the cat and mouse game Amazon plays with the Indian government by adjusting its corporate structures each time the government imposes new restrictions aimed at protecting retailers.
As Amazon faces increasing control from regulators, news of the strategy detailed in the documents could exacerbate the company’s risks in one of its key growth markets. Indian traders who are a crucial part of the Prime Minister Narendra Modi support base has long argued that Amazon’s platform is largely beneficial to several major retailers and that the e-commerce giant is involved in predatory pricing that harms their business.
In a written statement, Amazon said it had “always complied with the law” in India and that “as government policies continue to evolve, we are consistently making the necessary changes to ensure compliance at all times.”
Amazon also stated that it “does not provide preferential treatment to any seller in its market” and that it “treats all sellers in a fair, transparent and non-discriminatory manner, with each seller being responsible for the independent pricing and management of their inventory.”
Here are some key findings from the special report:
- The documents reveal that the US e-commerce giant has helped a small number of sellers prosper and given them reduced fees, using them to circumvent India’s regulatory restrictions on foreign investment aimed at protecting small traders.
- About 33 Amazon sellers account for about a third of the value of all goods sold on the company’s website in early 2019, the documents show. Two other major retailers – retailers in which Amazon had indirect stakes – accounted for about 35% of the platform’s sales revenue in early 2019. This means that about 35 of Amazon’s over 400,000 resellers in India at the time accounted for about two-thirds of its online sales.
- Documents show that Amazon exercises significant control over the inventory of some of Amazon.in’s largest sellers, although it publicly says that all sellers operate independently of their platform.
- Amazon helped Cloudy tail, a seller with an indirect stake, enters into special deals with major technology manufacturers such as Apple Inc., the documents show.
- One document contains a candid assessment of Modi. “Prime Minister Modi is not an intellectual or an academic, but he believes that strong administration and governance is the key to running a successful government,” it said.
Amazon says it is helping small and medium-sized businesses in India grow and already has over 700,000 vendors on its platform. During a visit to India in January last year, the founder of Amazon Jeff Bezos announced that the company would spend $ 1 billion (approximately 7,300 kroner) to attract small businesses online to the country. This would lead to Amazon’s total investment in India of up to $ 6.5 billion (approximately Rs 47,330).
In 2019, Amazon had nearly $ 10 billion (approximately Rs 72,800) in sales in India, according to Forrester Research
© Thomson Reuters 2021
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