Amazon’s dirty secrets are out and its making heads turn in shock and disbelief!
According to Reuters which reviewed the internal documents of the e-commerce giant, Amazon has given preferential treatment to a small group of sellers on its India platform for years, misrepresented their ties with sellers publicly and used them to circumvent the increasingly tightening rules around FDI that affect e-commerce.
Dated 2012 to 2019, the alleged documents provides an inside look into how Amazon has been successfully playing a cat-and-mouse game with the Indian Government by making sly adjustments in its corporate structure each time the Centre imposed new restrictions aimed at safeguarding the interests of small traders.
Below mentioned are some of the key findings from Reuters’ investigation
- The documents show that close to 33 Amazon sellers accounted for a 3rd of the value of all goods sold on Amazon India in early 2019.
- Two big sellers – merchants in which Amazon had indirect equity stakes accounted for 35% of the platform’s sales revenue during the same time. This means 35 out of 400,000 Amazon sellers in India in early 2019 accounted for two-thirds of its online sales.
- The internal documents also reveal that the American e-commerce giant helped a small number of specific sellers prosper by giving them a competitive edge of discounted fees and in turn used them to bypass India’s regulatory restrictions on foreign investment rules aimed at protecting small traders in the country.
- Even though Amazon publicly claims that all sellers operate independently on its platform, the documents revealed that the Bezos-owned giant exercised a significant amount of control over the inventory of some of the biggest sellers on its Indian platform.
- The documents show that Amazon allegedly helped Cloudtail, a big seller which it has an indirect equity stake cut special deals which tech manufactures such as Apple Inc.
- One document containing a frank opinion of the Indian Prime Minister and read: “PM Modi is not an intellectual or an academic but believes that strong administration and governance is the key to running a successful government.”
Now, when the news of the investigation of Amazon’s internal documents surfaced, the e-commerce behemoth, in a written statement, replied that they have always complied with the law in India and that the company has evolved with the continued evolution of government policies in the country in order to ensure compliance at all times.
Amazon also clarified that they do not give preferential treatment to any seller on its marketplace. Instead, it treats all sellers in a non-discriminatory and fair manner wherein each seller is responsible for determining their own prices and managing their own inventory.
But, nonetheless, the revelation of these alleged documents will definitely attract more scrutiny for Amazon which can end up hindering progress in the country – one of its key growth markets.
Amazon is already in a pickle as it continues to act as a pitchfork stuck between the fruition of the Reliance-Future deal in India and now they will be faced with the herculean task of fending off these recently surfaced allegations as well.
Lastly, one must note that Indian traders, who make up a crucial part of the PM’s support base, for long have already been alleging that Amazon exercises predatory pricing which harms their businesses. Thus, now that these documents can somewhat act as the final piece of the puzzle, it is highly likely the GOI will go after Amazon Inc. with a battle axe! We will keep you updated on all future developments. Until then, stay tuned.