Update

Amazon caught up in severe trouble amidst revelations of “sensitive/ not for disclosure” details from significant documents

It was mid 2019, and senior Amazon.com Inc leader Jay Carney was planning for a significant meeting. Carney was booked to chat with India’s representative to the United States in Washington, D.C. In Delhi, the Indian government had recently declared F.D.I. regulatory guidelines that were potentially disturbing for Amazon’s business in the Indian marketplace. 

Prior to the gathering, Amazon representatives arranged a draft note for Carney. The note, investigated by Reuters, exhorted Carney what to say – and what not to say.

The draft that has now come to the attention of the others, reveals sensitive details not meant for public disclosure. A number of Indian Traders who are members of PM Modi’s support base have had put allegations on Amazon before, for favouring a few big sellers and engaging in predatory pricing.

But on the other hand Amazon said in a written statement that it has nowhere failed to comply with the laws in India and they have adapted themselves to the development in the regulations by means of necessary changes.

It denied having favoured or preferred any seller over the others in its marketplace. Amazon claimed of treating sellers in a fair and transparent manner without any discrimination and that every individual seler is responsible on their own for determining prices and managing their inventory. 

As per the revelations made through the document, Amazon benefited a few sellers by providing them discounted fees, helping them to evade certain regulations upon foreign investments aimed at protecting small scale traders.  

During the early phase of 2019, 33 Amazon sellers accounted for a third of the total sales of that period. The document also shows key details about two big sellers having generated 35% of the total sales revenue in 2019 beginning. These are two such traders whose equity stakes are held by Amazon in an indirect manner. 

Cloudtail is one such seller, whose equity stakes are held by Amazon and that has been favoured by the e-commerce giant to be able to cut special deals with leading tech manufacturers like that of Apple Inc. 

Amazon held noticeable control over the inventory of some big sellers, which stands in contradiction to Amazon’s claim of all sellers working independently. 

In January 2020, India’s antitrust guard dog, the Competition Commission of India, reported it was examining Amazon and Walmart Inc’s Flipkart following a grievance by an Indian trader group. The commission did observe a few anti-competitive practices being carried out by the concerned entities- exclusivity in launching of cell phones by the reputed and leading e-commerce firms, favoring certain merchants on their sites, offering the favoured firms discounted rates, and prioritising certain seller listings over others.

As of now, the investigation has been put on hold following a challenge by Amazon and Flipkart, the other significant e-commerce platform in India.

Amazon is also under scrutiny by India’s Enforcement Directorate which has been examining the organization for conceivable infringement of foreign direct investment regulations.

Khushi

Khushi is an avid reader and loves analyzing companies in the digital space. Her interest is in online marketing, business, startups, and politics. She does everything perfectly by taking extra time.
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