Amazon’s Road To Profitability in India: Copy Products, Rigg Search Results To Promote Its Own Brands!

Must Read

Indian Marketers To Invest More On Social Media In 2013: 52% Focus On Customer Acquisition [Report]

Majority of e-Marketers are focusing on Customer Acquisition via Social Media in 2013, according to a latest e-Marketing research...

Are You A Gaming Geek: ‘Five Commandments’ Before You Buy Video Games Online !

Does your day start with joysticks instead of coffee mugs? Or as a kid your best friends were the...

Apple Inc. (AAPL) 5.5 Inch Screen iPhone 6 Could Be A Game Changer: Rumors Claims 5.7-Inch iPhone 6C

Apple Inc. (NASDAQ:AAPL) looks set to release iPhone 6 with a 4.7 inch screen in September this year. Mass production for...

Amazon.com Inc has been repeatedly accused of copying other brands’ products it sells through its website, and of using its massive collection of internal information to market products of its own brands at the cost of merchants.

Amazon, of course, has refuted all such claims and allegations. But the recent revelation from Reuters has, once again, put the e-commerce behemoths in hot water as it could attract the eyeballs of CCI (Competition Commission of India) that is responsible to maintain a level playing field for all players.

Thousands of pages of internal Amazon documents, which Reuters claims to have seen and analyzed include documents, strategy papers, along with business strategies, indicate that the company carried out a systematic campaign of creating knockoffs, and manipulating search results in order to prioritize its own lines of products in India – one of its largest growth markets.

Advertisements

The documents show the ways in which Amazon’s private-brands department in India concealed accessed internal data on Amazon.in to replicate products offered by other companies and later sold them on Amazon.in. They also encouraged the sales of Amazon private-brand products by manipulating Amazon’s search results to ensure that Amazon’s offerings were displayed in the first 2 or 3 results when shoppers were browsing on Amazon.in.

One of the victims of this strategy is the renowned shirt manufacturer from India, John Miller, owned by none other than Kishore Biyani, dubbed the nation’s “retail King.” Amazon decided to “follow the dimensions for” John Miller shirts down to neck circumference as well as sleeves’ length, Reuters claims while citing the leaked internal document of Amazon.

The rigging was not just limited to copying the measurements of popular products. Amazon employees analyzed proprietary information regarding other brands on Amazon.in and also detailed information about returns by customers as well. The goal was to find and target products – defined by Amazon.in as “reference” as well as “benchmark” products and to replicate them eventually. In the course of this effort the internal report of 2016 described Amazon’s strategy for an in-house brand, dubbed as Solimo, that the e-commerce behemoth initially developed specifically for the Indian market. The Solimo strategy, according to the report was as easy as “use the information on Amazon.in to create products and then sell the goods to the customers who are looking for the similar products on Amazon.in itself.

It is believed that the Solimo initiative, focused on India market, has an international impact: Hundreds of Solimo-branded products for household and health are now available for purchase at Amazon’s U.S. website, Amazon.com.

The document from 2016 also reveal even more shocking information; Amazon employees working on Amazon’s own products, also known as private labels or private brands, didn’t shy away from approaching the actual manufacturers of the items targeted for replicating. They learned that these producers use “unique methods that affect the final high-end quality and performance” which is essential for creating higher demand and beat other brands listed on the platform.

Advertisements

The document, which is titled “India Private Brands Programme” explains the reason behind choosing the same manufacturers behind the products of other brands. Amazon opted the easy way and decided to feast upon the information readily available.

“It is difficult to build this knowledge across different products, and to ensure that we’re capable of achieving a perfect match in the quality of our product, we chose to partner only with manufacturers of our product of reference.” It referred to the manufacturing expertise “Tribal Know-how.”

Reuters claims are allegedly based on internal documents from Amazon that offer an unfiltered, authentic view of Amazon’s business practices they the company has repeatedly denied.

In the past also Amazon was accused by employees working on private brand products of using proprietary information from sellers to create rival products as well as manipulating results of search searches to boost the sales of its own products.

In February Amazon was accused of granting special treatment to some major seller on its Indian marketplace, as well as had used the sellers to get around rules designed to protect small-scale retailers in the country. It led to an action by India’s primary finance crime agency, which requested documents and details from Amazon. Furthermore, the country’s antitrust regulators submitted the report as an evidence in a lawsuit against Amazon in its probe into the company’s anti-competitive practices. The court ruled against Amazon’s attempt to stop the investigation.

In sworn testimony before the U.S. Congress in 2020, Amazon founder Jeff Bezos said that the company restricts its employees from using the information about individuals selling to aid in its private-label business. And in the year 2019 another Amazon executive was able to testify that the company doesn’t utilize the data to design its own private label products or alter the search results to favor the sellers. The Reuters report, however, paints a completely different picture alltoghther.

The documents seen by Reuters reveal for the first time at the very least, in India manipulating results for Amazon’s products and copying the goods of other sellers were an official, secret strategy employed by Amazon. Surprisngly, the top executives were also well aware of the plan. The documents reveal that two top executives, senior vice-presidents Diego Piacentini, who left the company after being on leave for 2 years, as well as Russell Grandinetti, who currently is the head of Amazon’s international consumer business, well aware about the India strategy.

“As Reuters hasn’t shared these documents or the source with us and we’re not able to verify the authenticity or accuracy of the claims in the manner they are stated. We believe that the claims made are unsubstantiated and based on fact,” Amazon said in response to the Reuters’s Special Report.

Amazon, however, did not go into detail. The statement also didn’t answer the questions raised by Reuters regarding the evidence found of the papers in which Amazon employees copied products from other companies to promote its own brand.

Amazon said that its method of displaying results does not favor private-brand products. “We show results for searches based on their relevance to the search query of the user regardless of whether products have private brands that are offered from sellers.” Amazon said.

Amazon added that it “strictly does not permit the sharing or use of seller-specific, non-public data to benefit any seller, even sellers who are private brands,” and that it is investigating allegations of employees who violate the policy.

Piacentini and Grandinetti haven’t responded to requests for clarification.

The unfiltered perspective that these documents provide into Amazon’s incessant use of its market dominace may increase the regulatory and legal challenges the company faces in a variety of countries.

Amazon is currently under investigation in the United States, Europe and India for alleged anti-competitive actions that have harmed other companies. In India there are allegations of discriminating against its brand of products. Amazon did not speak to the allegations.

Amazon’s brand names were crucial in India. Amazon began its first e-commerce venture in 2013 and quickly was able to record millions of dollars in losses, as one internal document indicates. To make the company “sustainable over the long term,” the 2016 Private Brands document states, Amazon embarked on a plan to introduce its own private brands including AmazonBasics and Amazon’s new brands specifically designed for India.

The document of 2016 set out that Amazon would offer its own products in 20 percent or 40% to 60% of product categories available on Amazon India in the next two years. Amazon will be able to achieve profitability in its private-brand business “only offering products that have a higher margin than similar reference brands.”

Amazon forecast that private-brand sales will be close to 600 million dollars by the year 2020 in India according to an internal business strategy document. “We will be among the top three brands in each category that we are a part of,” the document stated.

If it was successful in achieving that sales target isn’t certain; Amazon doesn’t disclose its private-brand sales in India. Amazon didn’t make any comments on its strategic goals or other details in the documents cited within this piece.

SourceReuters

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest News

The Future of Apple MacBook Pro M1 Seems To Be In Question

If you're thinking of buying a new MacBook Pro with M1 chipset then stop and give this article a...

In-Depth: Dprime

Will ‘TikTok By Microsoft’ Be A Winner?

For the last two years, TikTok has been in the public eye for all sorts of reasons. First, it was the exploded and unparalleled...

Facebook Subscription Model: Looking Beyond Ad Dollars?

Seldom do job listings create a stir this gripping. However, when the job listing in question is a stealth post from Twitter, with a...

Will The Online Food Delivery Market in India End Up Becoming A Two-Horse Race?

It's pretty much evident that the food delivery space in India is all set to get riled up soon enough as one of the...

More Articles Like This