Amazon accused of giving preferential treatment to big sellers in India

Small shopkeepers accuse Amazon of bending rules designed to protect India's small traders from being crushed by the ecommerce giants

Amazon has been accused of favouring big sellers, bypassing an Indian government law designed to protect small traders.

The Confederation of All India Traders (CAIT) has urged the Indian government to ban the local operations of ecommerce giant Amazon following a report by Reuters which alleged that Amazon favours big sellers on its Indian platform and has given them preferential treatment for years.

The Reuters report also accused American firm of manoeuvring around the foreign direct investment (FDI) rules established by the Indian government to protect India's small traders from getting crushed by e-commerce giants.

According to Reuters, the report is based on internal Amazon documents, including drafts of meeting notes, emails, business reports and PowerPoint slides, dated between 2012 and 2019.

The documents showed that some 33 Amazon sellers out of more than 400,000 in India accounted for about one-third of the value of all goods sold on the company's website during that period.

One document, revealed that two other sellers on Amazon's India platform accounted for about 35 per cent of sales revenue in early 2019, with Amazon having indirect equity stakes in those two traders.

That, in effect, meant that some three-dozen of Amazon's sellers in India at the time accounted for around two-thirds of the total online sales.

Based on Amazon's documents, the report claimed that Amazon gave discounts on fees to a small number of sellers, and helped one seller to strike special deals with tech giants such as Apple. The American firm also exercised significant control over the inventory of some of the leading sellers on its India platform, according to Reuters.

In 2016, the Indian government announced rules that barred ecommerce firms from exercising ownership over sellers' inventory.

Together, all these documents reveal, as per the report, how Amazon tried to adjust its corporate structures each time the Indian government announced new restrictions on foreign e-commerce companies, amid growing protests from small traders.

CAIT, which claims to represent over 80 million retail stores in India, described the revelations as "shocking" and "sufficient enough to immediately ban operations of Amazon in India".

In a letter addressed to its employees, Amazon described Reuters story as "unsubstantiated", "incomplete" and "factually incorrect".

Amit Agarwal, global senior vice-president and country leader for Amazon India, stated that Amazon has always followed all Indian laws and remains compliant with these laws.

"We haven't seen the documents and Reuters hasn't shared provenance to confirm veracity- the details are likely supplied with malicious intent to create sensation and discredit us," Agarwal said, according to Business Standard.

In January 2020, India's antitrust watchdog, the Competition Commission of India, opened a probe against Amazon and Flipkart following a complaint by an Indian trader group. The commission said it would probe whether these companies are engaged in anti-competitive practices in India.

In a separate investigation, India's Enforcement Directorate is looking whether Amazon has violated any foreign investment rule in the country.

Amazon told Reuters that it was confident of its compliance and was cooperating with the antitrust watchdog and Enforcement Directorate in their investigations.