Thirty five sellers, Cloudtail one of them, accounted for two-thirds of Amazon’s sales in India, Reuters reported. The agency’s reporting reveals how Amazon used legal manoeuvres to sidestep Indian regulations aimed at curbing deep discounting, and limiting Foreign Direct Investment. The report also reveals details of prep notes for meetings between Amazon officials and the Indian ambassador to the US and Prime Minister Narendra Modi. In the former meeting, Amazon warned a top official to not disclose the sales concentration in a small number of retailers, saying this information was ‘sensitive’.
We have reached out to Amazon for its responses to the report.
The revelations may increase government scrutiny on the company, and have already inflamed local traders who have long considered e-commerce platforms to be an existential threat. Over the years, CAIT and other trade associations have accused Amazon and Walmart-owned Flipkart of predatory pricing and violating FDI norms. In January, the government forwarded some of these concerns to the Enforcement Directorate and to the Reserve Bank of India. The Competition Commission of India is currently looking into allegations of preferential treatment by Amazon to select sellers.
The Confederation of All India Traders has demanded a ban on Amazon following the report. In a press conference, CAIT Secretary General Praveen Khandelwal said that the traders’ union believes around 80-85% of goods sold on Amazon come from this small group of merchants like Cloudtail. Khandelwal said that CAIT may pursue legal action in courts.
Other revelations by the report include:
- Amazon had a presentation with a suggestion to “Test the Boundaries of what is allowed by law,” and suggested plans for what to do in case there were raids by the government
- After the government placed limits on having retailers like Cloudtail sell on Amazon which the company had equity in, Amazon set up a second retailer to forgo a 25% cap
- In the run-up to an August 2014 meeting between Jeff Bezos and PM Modi, the company wrote in a briefing note for the Amazon CEO that “PM Modi is not an intellectual or an academic but believes that strong administration and governance is the key to running a successful government. He is known to like simple, logical, straight forward thinking without excessive academic jargon.”
- In spite of promising to treat all sellers equally, Amazon helped Cloudtail and other large sellers cut deals with manufacturers like Apple, and offered them discounted platform fees.
Trisha Jalan contributed reporting.
Update (5:05pm): Added remarks from CAIT Secretary General Praveen Khandelwal.