Amazon.com Inc. (NASDAQ:AMZN) faces regulatory scrutiny in India following allegations that the e-commerce platform has been giving preferential treatment to big sellers in the country. According to Reuters, the company used the so-called big sellers to circumvent India’s foreign investment rules meant to protect small traders against the e-commerce giant’s dominance.
Documents reveal how Amazon circumvented regulations in India
Internal company documents dated between 2021 and 2019 reviewed by Reuters reveal the dodging strategy Amazon has been using to circumvent regulations. Each time the Indian government imposed new regulations to protect small traders, the company adjusted its corporate structures.
For instance, in 2019, when amazon’s senior executive Jay Carney was scheduled to speak with India’s US ambassador, the Indian government had announced new regulations that threatened the e-commerce giant’s business in the country. Before the meeting, the company prepared a draft note for Carney in what he was to say and not to say. The note indicated that Carney should point out that Amazon had invested over $5.5 billion in India and offers an online platform for over 400,000 sellers. However, the company cautioned Carney against revealing that around 33 sellers accounted for almost 33.3% of the value of goods offered on Amazon’s e-commerce platform in India.
Few traders account for almost 66% of Amazon’s revenue in India
Interestingly other company documents revealed that two sellers on the company’s eCommerce platform in India in which the company had an indirect stake accounted for almost 35% of sales revenue in 2019. This implies that 35 of the over 400,000 sellers on the company’s platform in India accounted for almost two-thirds of all online sales.
Notably, this was sensitive information that, if it got out at the time, could give small retailers ammunition to allege that the e-commerce giant was flouting federal regulation by affording preferential treatment to big sellers. The company is facing regulatory scrutiny following the revelation of its strategy. Smaller traders in India have been alleging that the Ammon platform favors big sellers and that Amazon engages in predatory pricing harming their businesses.