Amazon ‘deployed strategy to dodge India regulators’

Amazon has for years given preferential treatment to a small group of sellers on its India platform, publicly misrepresented its ties with the sellers and used them to circumvent increasingly tough foreign investment rules that affect e-commerce, internal company documents revealed.

The documents, dated between 2012 and 2019, provide an inside look at the catand-mouse game Amazon has played with India’s government, adjusting its corporate structures each time the government imposed new restrictions aimed at protecting small traders.

With Amazon facing increasing scrutiny by Indian regulators, news of the strategy detailed in the documents could deepen the risks for the company in one of its key growth markets.

Indian traders, who are a crucial part of Prime Minister Narendra Modi’s support base, have long alleged that Amazon’s platform largely benefits a few big sellers and that the e-commerce giant engages in predatory pricing that harms their businesses.

In a written statement, Amazon said that it “has always complied with the law” in India and that “as government policies have continued to evolve, we have consistently made the necessary changes to ensure compliance at all times.”

Amazon also said it “does not give preferential treatment to any seller on its marketplace,” and that it “treats all sellers in a fair, transparent, and non-discriminatory manner, with each seller responsible for independently determining prices and managing their inventory.”

The documents reveal that the American e-commerce giant helped a small number of sellers prosper and gave them discounted fees, using them to bypass India’s regulatory restrictions on foreign investment aimed at protecting small traders.

Some 33 Amazon sellers accounted for about a third of the value of all goods sold on the company’s website in early 2019, the documents show.

Another two big sellers — merchants in which Amazon had indirect equity stakes — accounted for around 35% of the platform’s sales revenue in early 2019.

That meant some 35 of Amazon’s more than 400,000 sellers in India at the time accounted for around two-thirds of its online sales.

Amazon exercised significant control over the inventory of some of the biggest sellers on Amazon.in, the documents show, even though it says publicly that all sellers operate independently on its platform.