Tuesday 18 October 2016

Amidst allegations of illegal practices, Amazon to focus on money spinners in second phase of sale

American ecommerce major Amazon seems to be doing its best to claw its way to the top. Unhappy with arch-rival Flipkart’s (slightly) better performance in the recent Diwali sales, the company is resorting to different means to keep up.
In the first round, Amazon did not focus on any specific category. This was in contrast with Flipkart’s planned approach that paid off. The latter put the spotlight on expensive and fast moving categories including electronics and mobiles. CEO Binny Bansal confirmed the company’s plan,
“Our focus was on mobile, lifestyle and large appliances, and that is what we believe customers want to buy during this time.”
However, Bansal’s veiled reference to Amazon’s plan that appears to be an all-over-the place approach is what seems to have stung the US bellwether. The company is looking at levelling the playing ground in phase two of its sale. Bansal had said,
“You can run sale on hing, churan, besan and Bournvita anytime.”
Amazon responded to that with the following statement,
“With customers shopping from 90% of India’s serviceable pin-codes for everything from mobiles, TVs, appliances, furniture, sports equipment to fashion, home furnishings and everyday essentials in the first phase, we believe that they will continue to trust us to shop for all their festive needs going forward too.”

What to expect in round 2

Amazon has announced a sale from October 17 to 20. This time it’s going to be smartphones, 60-inch TVs, home appliances, exchange offers and interest free EMIs. Brands like Videocon, Whirlpool and LG will be offering discounts between 10 to 15%. LG will also launch products exclusively on Amazon.

Allegations of law breaking

Retailers and sellers are worried about the impact ecommerce is having on their livelihood. Despite the DIPP’s ruling on FDI that prevents marketplaces from influencing their seller’s prices, retailers point out that all leading marketplaces are advertising sales and discounts. The DIPP clarifies that this is a violation.
Amazon has allegedly introduced its subsidiary Amazon Export Sales LLC as a seller on its marketplace. The company denies any law breaking. A spokesperson said,
“Amazon Exports Sales LLC is an exporter of products and therefore the mention of custom duties in their listings. Amazon has a high bar for compliance with laws of the land and Amazon.in is in compliance with all applicable laws.”
The All India Online Vendors Association (AIOVA) is ruing the government’s indifference to their problems. The AIOVA’s spokesperson complains that no ministry is inclined to hear out their grievances. They are simply being directed to another department.
Recently Amitabh Kant, CEO of Niti Aayog instituted a committee to monitor ecommerce rules and laws. The AIOVA says they were left out of the party while Amazon and Flipkart were invited.
Kumar Rajagopalan, CEO, Retailers Association of India (RAI) says,
“We have been noticing what the marketplaces are doing and hope to appraise the government of what is going on in the garb of a marketplace.”
Sanchit Vir Gogia, CEO and chief analyst at Greyhound Research disagrees. He says,
“There are no rules stating that foreign stores or sellers cannot sell through an Indian marketplace. So what is the issue?”
Retailers have raised objections in the past too. The Confederation of All India Traders (CAIT) complained to the DIPP against etailers’ discount policies and violation of the FDI.
It appears to be a never ending war between the marketplaces and physical retailers. Where will this end?

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