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If you are happy buying your favourite products on <keyword id="2508995" type="UNKNOWN" weightage="20" keywordseo="Flipkart-and-Amazon">Flipkart and Amazon</keyword> – that’s the reason of headache for smaller ecommerce companies. In a written complaint to the <keyword id="97393" type="ORGANIZATION" weightage="20" keywordseo="Competition-Commission-of-India">Competition Commission of India</keyword>, a group on online sellers have alleged that <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword>'s WS Retail and <keyword id="18635" type="CITY" weightage="20" keywordseo="Amazon">Amazon</keyword>'s <keyword id="2682122" type="UNKNOWN" weightage="20" keywordseo="Cloudtail">Cloudtail</keyword> are offering heavy discounts when selling private label products. This in turn is damaging their business. 
 
These vendors have alleged that WS Retail and Cloudtail offer phones, gadgets and appliances at ‘rock-bottom prices’. 
 The retailers of private labels AmazonBasics and Flipkart SmartBuy have been tendered special benefits that haven't been disclosed publicly, the All India Online Vendors' Association, a group of 2,000 sellers on various online platforms, contended in a letter to the <keyword id="47183" type="ORGANIZATION" weightage="20" keywordseo="CCI">CCI</keyword>. The letter dated March 2, 2017, was reviewed by <keyword id="77091" type="COMPANY" weightage="20" keywordseo="The-Economic-Times">The Economic Times</keyword>. 
 "Flipkart has always conducted its business with transparency, integrity and in full compliance of all applicable laws,” a company spokesperson told The <keyword id="6474066" type="COMPANY" weightage="20" keywordseo="economic-times">Economic Times</keyword>. "Our private label, Smart-Buy, has enjoyed rapid success primarily due to the superior quality of products. We've shared the success of the brand and empowered sellers by licensing it to them but only after they meet our rigorous quality checks. The popularity of SmartBuy and the increased business has led to tremendous gains for sellers.” 
 
When Indian start ups are complaining against predatory pricing of foreign players, it’s ironic to see, the same ecommerce company indulging in predatory pricing and destroying the ecommerce ecosystem of the country.

Smaller e-commerce companies angry with Amazon and Flipkart’s heavy
discounts

Amazon India’s biggest vendor in the country, Cloudtail India, which sells around 10% of Amazon India’s products posted a sales of Rs 1,145 crore in 2014-15. 
 
Amazon India has not filed its financial data yet for the financial year. 
 
In its filing with the Registrar of Companies, Cloudtail said it incurred a net loss of Rs 32 crore in its operations. 
 
After Cloudtail’s sales, it can be said that Amazon India garnered more than Rs 10,000 crore in sales this fiscal. 
 
"Cloudtail is an independent seller on the platform. Amazon.in is a neutral platform for all sellers. Amazon has so far impacted one lakh plus sellers in India. Over 50,000 of these are selling and growing their businesses profitably using our platform," the spokeswoman told ET. 
Amazon India has plans to further expand in the country and has increased expansion multi-fold in the past years. 
 
Amazon India claimed that its portal was the largest store in the country, offering more than 40 million products and adding 55,000 new products every day. 
 
"We saw 250% growth in our seller base and emerged as the most visited site twice this year. We also received 65% orders from tier II cities and below and 70% of our traffic came from mobile," said Amit Agarwal, Amazon India's vice president and country manager. 
 
Goldman Sachs has stated that India's e-commerce market will grow to $103 billion by 2019-20 from present $26 billion.

Amazon India’s biggest vendor posts sales of over Rs 1,000 cr, loss of Rs 32 cr

<keyword id="541988" type="COMPANY" weightage="20" keywordseo="SnapDeal">Snapdeal</keyword> hasn’t been in the pink of health for some time now. Industry watchers will find the latest developments in the company as no surprise that it is in the process of downsizing close to 1300 employees with an eye on cutting costs. While, the move hasn’t really been confirmed by the company, it comes as almost a given with how much it has been struggling to raise funds, with its bumper Rs 200 cr image makeover last November failing to hit the mark. As a direct result of the planned downsizing in human resources, the segments which will be affected the most include the marketplace health team from which around 38 people are allegedly being let off. The company has an estimated headcount of over 4,000 employees currently. 
 
It’s not that the company hasn’t tried hard to stay afloat in an increasingly predatory environment. Last year, Snapdeal offered flat Rs 10,000 off on iPhone7 and iPhone 7 plus for American Express credit card users, amongst many other such incentives to gain loyal consumers, the key to remaining alive. You may find the company at fault for downsizing, but they’re not. According to some investors that have been closely watching this whole scenario pan out, Snapdeal has two choices: 1) Try to compete with heavier discounts being doled out by larger competitors or 2) Just ignore the competition, which can never be done. Either way they’re losing their business. So, the question then is what are Snapdeal’s real pain points and is it alone in this fight? 
 It was while digging for these answers that <keyword id="824043" type="COMPANY" weightage="20" keywordseo="Business-Insider">Business Insider</keyword> came upon a term repeatedly thrown at it to describe the real problem ailing India’s <keyword id="138263" type="UNKNOWN" weightage="20" keywordseo="startup">startup</keyword> ecosystem- <keyword id="4055995" type="UNKNOWN" weightage="20" keywordseo="Capital-Dumping">Capital Dumping</keyword>. Experts, investors and the largest startup players in India, all seem to be in unison when they point the finger at these two words to describe what is really affecting not only their margins, but overall survival in the country. 
 
So, what is Capital Dumping and why is it such a big deal? 
 
Dumping, in reference to international trade, is the export by a country or organization of a product at a price that is lower in the foreign market than the price charged in the domestic market. 
 
When we ask, 'Can markets solve problems?' we should recollect our blind trust in the idea that only good will emerge when distinctive entities fight it out in the market. Market fundamentalism can be risky particularly if a few players have an unfair advantage (money muscle in this case). 
 
During researching this story, Business Insider spoke to multiple big investors and companies in the ecosystem. However, given the sensitivity of the topic, all of them requested anonymity. 
 
This is what one experts said: “On one hand we talk about the freedom in doing business, on the other hand we’re curbing that freedom by imposing regulations and saying we want a level playing field. If you want equality-- go be a social worker and not an entrepreneur. 
 
Another expert had a totally contrarian view: “Capital Dumping is true and it’s happening and no one is doing anything about it. The government is quiet; the CCI is not saying anything. The case clearly falls in the jurisdiction of CCI. Investors will stop investing in local companies, jobs will be lost, and economy of the country will be hurt. It’s high time we regulate the market or fail as a nation.” 
 
In that case, what is really happening on the ground? 
 
Impact on India’s buzzing eCommerce sector 
 
The eCommerce sector in India is rapidly growing. The internet business market was worth about $3.9 billion in 2009, it went up to $12.6 billion in 2013. In 2013, the e-retail fragment was worth US$2.3 billion. By 2020, India is required to generate $100 billion online retail income out of which $35 billion will be through design web based business. 
 
The brick and mortar retailer community has dependably been concerned about the infusion of foreign capital in eCommerce marketplaces in India and has persistently been blaming such eCommerce players for dumping foreign capital to offer disruptive prices with a goal to diminish healthy competition in the market. However, now even the domestic eCommerce players have begun raising a few eyebrows on the easy accessibility of foreign capital to the foreign eCommerce marketplaces operating in India and the hefty discounts and offers given by such marketplaces to the customers. 
 Experts, some of whom are known investors in startups, that Business Insider spoke to while digging into the matter said, “Unregulated markets can be anti-competitive, on the grounds that it gives a few players undue advantage. Take the instance of <keyword id="18635" type="CITY" weightage="20" keywordseo="Amazon">Amazon</keyword> and Uber. They have entry to almost unlimited finance and have allegedly been using that very power to stifle competition by giving products and services that are economically unviable even to them in the long term. While it may appear to be a good deal for the customers, it can be a bad deal for the country as a whole. These companies are operating on negative gross margin sales in India funded by positive gross margins abroad.” 
 
The Festive sale: Where discounts count more 
 An article published by a leading media house, stated that <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword> spent about half of what rivals such as Amazon India and Snapdeal did in promoting their recent sales events. “In its October 2-6 Big Billion Days (BBD), Flipkart sold 15.5 million units and raked in sales of about Rs 3,000 crore, the executives, quoted in that article, stated—marginally edging out arch-rival Amazon India which shipped 15 million units during a blockbuster sale that was easily the biggest showdown in the history of Indian e-commerce.” 
 
So, how does this phenomenon really work? A very clear example of that would be the case of a US-based startup, Diapers.com, which was taken off the market within a few months of its existence by Amazon, in what was allegedly a case of predatory pricing by the global eCommerce behemoth to acquire the startup. 
 
Diapers.com versus Amazon 
 
Diapers.com started as a diaper selling startup. They went on building their customer base and then went to other products. The company became such a success that even Amazon started taking notice. Amazon “supposedly” reduced their diaper prices by 20%, at the same time negotiating to buy out the company. The founder refused by giving a figure that was a hell lot more than it was valued ($3 billion). Retaliating, Amazon further reduced the prices of diapers by 50-60% on its platform. Now no negotiation could happen, since the diaper market as a whole had been disrupted by these ‘low prices’. Amazon eventually brought the company right on their knees and bought them at a very cheap price. 
 
We can take a gander at our own particular economic history. Indian textiles industry, for instance. It has a long history extending back to centuries and over years it had build up a rich assortment — also a thriving economy around it. However, amid the British period the whole sector was pushed to the brinks of extinction by the machine made garments imported from England. 
 
Amazon on the other hand maintains, “We continue to work towards creating a robust eco-system for the small businesses – we today have about 150k sellers on our platform, that grew 160% YoY, and we continue to enhance this eco-system with multiple India specific initiatives.” 
 
Ola versus Uber 
 
This state of existence doesn’t change much in the ride-hailing space, which has seen some of the biggest investments pouring in over the past few years. The problem, experts say is almost identical to what Flipkart or Snapdeal is facing, from let’s say with Amazon. While Ola may not face head-on competition from Uber in almost 85% of its markets, however, it faces stifling competition from Uber in 15% of its biggest markets that include cities like Delhi, Mumbai, Chennai and Bangalore, the biggest ride-hailing hubs for both the players. For Ola, much like Flipkart the key to continued existence has been investing in technology to make their limited resources work more effectively and efficiently. For instance, Ola introduced Select, their lighter version that runs on 2G internet and to help drivers and consumers in tier2 cities, they introduced 9 different languages on their platform. Ola has recently been on an overdrive hiring talent to develop innovative tech on their platform. However, the fear that their global competitor might throw in a few extra bucks and make a killing in hiring good tech developers always rings loud, as does the fear of what else those extra bucks can do. 
 
Is Modi’s Startup India-Standup India at risk, then? 
 
The experts that BI spoke to have a clear point to make here. They say, “Modi's Startup India Standup India initiative is probably not going to succeed and India's startup ecosystem won't ever take off, if a dumping-like strategy can be utilized against Indian startups. We're seeing a couple of self assumed economists and pundits deriding the idea of controlling the market. To make it clear very clear, this is not an employment pitch." 
 An expert from one of Bangalore’s biggest investment firms said, “If India's largest web firms flop, accordingly a huge number of jobs won't be created. It is interesting to note here that Chinese web firms have created over 2 million occupations. In India <keyword id="6360657" type="COMPANY" weightage="20" keywordseo="OLX">OLX</keyword> has 300 representatives to Quikr's 2,700; Uber has 1,500 workers to Ola's 5,000 (2015).” 
 
Why are Investments hurting? 
 So what is it that investors look at when pouring in the much required moolah into these internet companies? Some experts say, “Allowing a dumping-like strategy could make foreign interest in Indian-tech fall. In China after the government prohibited certain MNCs, foreign interest in web boomed (2004–2014: generally $200 billion) through investments into Chinese firms. When a big tech-company starts to flounder, investors, currently all foreign in nature, start pulling back to a wait-and-watch approach to see if the company can ride out the tough time. That is exactly what is happening in the Indian scenario today. As Snapdeal, Flipkart and Ola struggle to raise funds, all investors, even those with equity in those companies such as Tiger Global, <keyword id="270604" type="ENTERTAINMENT" weightage="20" keywordseo="Sequoia">Sequoia</keyword> and even Soft Bank are choosing to sit this one out, for a clear winner to emerge, on whom then the big bets will be made.” 
 
The Vital Stats of the Big Fish 
 
<a href="http://economictimes.indiatimes.com/markets/stocks/earnings/amazons-net-loss-from-india-business-widens-to-rs-1724-crore-even-as-sales-jump-six-fold/articleshow/50710173.cms">Amazon</a>’s losses in India jumped up from Rs 1,724 crore in the year ago period, while revenue more than doubled to Rs 2,275 crore, up from Rs 1,022 crore in financial year 2014-15. The figures are from documents filed with the Registrar of Companies. 
 
Amazon India's biggest vendor in the country, <a href="http://www.businessinsider.in/Amazon-Indias-biggest-vendor-posts-sales-of-over-Rs-1000-cr-loss-of-Rs-32-cr/articleshow/50392049.cms">Cloudtail India</a>, which sells around 10% of Amazon India's products posted a sales of Rs 1,145 crore in 2014-15 After Cloudtail's sales, it can be said that Amazon India garnered more than Rs 10,000 crore in sales this fiscal 
 
<a href="http://trak.in/tags/business/2016/08/27/uber-financial-losses-india-2016/">Uber</a> has already lost a whopping $1.3B in the first half of 2016! Uber <a href="https://techcrunch.com/2014/11/26/uber-is-literally-sucking-the-money-out-of-its-rivals-in-india/">raised</a> $1.2 billion in funding in June, so you might justifiably ask why it is reportedly closing in on $1 billion more less than six months later. The answer may just be an aggressive international expansion in Asia, with a particular focus on India, given how they exited their other big Asian bet-China. 
 
<a href="http://www.moneycontrol.com/news/sme/snapdeal-plans-to-layoff-1300-employees-will-assess-resources_8479321.html">Snapdeal</a> plans to lay off 1,300 employees, will assess resources 
 
Amazon India lead the loss tally in 2016 followed by <a href="http://www.moneycontrol.com/news/sme/flipkart-leads-loss-tally2016-followed-by-amazon-snapdeal_8290461.html">Flipkart</a>, Snapdeal at Rs 3, 572 crore. Amazon India spent heavily on marketing, discounts and tech infrastructure. 
 
<a href="http://www.bloombergquint.com/business/2017/02/08/softbank-records-dollar355-million-loss-on-snapdeal-ola-investments">SoftBank</a> Records $351-Million Loss on Snapdeal, Ola Investments 
 
Last word 
 
Experts say, “The lack of regulation in the marketplace can cause serious damage to the country.” Take China for example, they banned foreign internet companies to reach $1 trillion in market value. Take Europe on the other hand, they allowed internet companies to enter and do whatever they want, to reach $50 billion only. 
 Uber tried to establish its market in China, they did succeed to a limit, but when you have to run a company in China or Russia, you’ll need the support of the politburo. And the Politburo always prioritizes their own national company over any other. Investors too favoured the local ride-hailing service of ‘<keyword id="3141620" type="UNKNOWN" weightage="20" keywordseo="Didi-Chuxing">Didi Chuxing</keyword>’ and it overtook Uber. UberChina spent more than $1 billion over the past three years, still government regulations and the startup community as a whole went on favouring the local company. 
 
In the case of India, experts believe that while there should be a level playing field, it is very important for India to come up with its own set of Government-owned or backed funds that will make the money available to players when in need. 
 
Alternatively, the question arises if India needs an anti-dumping law or regulation to provide governing rules in relation to dumping or utilization of foreign capital by internet companies in India? India is currently progressing towards opening-up the market further for foreign investors. Will a stage towards setting up of a regime to check or force conditions on utilization of overseas capital be dynamic or digressive? 
 
Many investors and entrepreneurs of the country are genuinely worried about the level of playing field and most of all, the capital dumped by these foreign companies in their Indian counterparts. They say, “This dumping of capital is becoming a huge factor for unemployment in the country (automation still stands the first) and in the long run it’ll be heartbreaking for the economy.” 
 
Some experts say, “There are concerns raised about capital dumping by large foreign companies to the detriment of Indian startups. It has set off an extreme debate in the Indian startup ecosystem.” Some are contending that companies, for example, Amazon and Uber had unfair advantage over their Indian competitors, for example, Snapdeal, Flipkart and Ola. Others argue that this is the way free markets work — and any intervention by the government would just make things worse for the consumer at large. 
 
Business Insider’s Take 
 
While we believe in the existence of a level-playing field that creates ‘good’ competition, the rising examples and connotations towards capital dumping in the ecosystem cannot be ignored. While foreign investors are largely to be credited for the Indian startup ecosystems’ thriving so far, what is also alternatively happening is that its single point focus on ‘winning models’ has stifled innovation that is truly required to ‘solve real Indian problems’. Should then the Government flex its muscles a little more? Well, no. The government has never done any good any time it has meddled in business. What is required is a healthy mix of foreign and Indian investors that will hedge a bet not only on models that have been tried and tested, but will also show faith in the really innovative ones that will do the economy a huge favour.

BI Investigation: Is ‘Capital Dumping’ killing Indian
Startups?

In a bid to make profits, <a href="http://www.businessinsider.in/searchresult.cms?query=amazon&amp;sortorder=effectivedate">Amazon</a> India has increased its referral rates, or the commission, it charges sellers on its e-<a href="http://www.businessinsider.in/searchresult.cms?query=ecommerce&amp;sortorder=effectivedate">commerce</a> platform last month. 
 <keyword id="6354743" type="COMPANY" weightage="20" keywordseo="Amazon-India">Amazon India</keyword> has increased the referral rates on mobile phone accessories by 9% and in case of luggage, pet accessories and shoes 2% has been hiked. 
 
Apart from commission, the online marketplace also increased charges for logistic support it gives to sellers. 
 
As per the revised rates of Amazon Easy Ship logistical support, minimum charge is applicable up to a weight is 500 grams and if any item weighs more than 500 grams, the seller will be charged in multiples of the price applicable for each 500 grams. 
 The sellers have raised a red flag on this issue and have also alleged that Amazon India is charging less from <keyword id="2682122" type="UNKNOWN" weightage="20" keywordseo="Cloudtail">Cloudtail</keyword> India, the largest vendor on its platform. 
 
"On one side they are increasing commission of sellers, (and) on the other side they have decreased commission for Cloudtail. We demand Amazon to come clear on its contract with Cloudtail so that we sellers do our planning accordingly," spokesperson of the All India Online Vendors' Association (AIOVA), told ET. 
 
AIOVA claimed Amazon India did not consult sellers before changing the rates. "Changes in commission cannot be avoided. But Amazon is on a one-sided track, not taking sellers' views on policy changes," its spokesperson told ET.

Sellers are upset with Amazon India after it increases referral rates by 9%

<ul><li>Recent leaks from the draft e-commerce policy spell more trouble for the likes of <keyword id="18635" type="CITY" weightage="20" keywordseo="Amazon">Amazon</keyword> and <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword>.</li><li>E-commerce firms in India will have to ensure that all sellers on the platform are treated equally and should not use algorithms to give partial treatment to any seller.</li><li>Recently, Amazon’s businesses had come under speculation for preferential treatment towards sellers that it had a stake in – Cloudtail and Appario.</li></ul>The Indian government is in the final stages of formulating its draft e-commerce policy and recent leaks from the draft spell more trouble for the likes of Amazon and Flipkart. A Reuters report said that the draft <a href="https://www.reuters.com/article/india-ecommerce-policy-idUSKBN2B50DJ">e-commerce policy</a> would ensure that e-retail platforms in India will have to ensure that all sellers on the platform are treated equally and should not use algorithms to give partial treatment to any seller. “E-commerce operators must ensure equal treatment of all sellers/vendors registered on their platforms and not adopt algorithms which result in prioritising select vendors/sellers,” says the new policy as per Reuters. In the initial draft released by the government in November 2019, FDI in e-commerce will only be allowed for the marketplace model and not for inventory-based selling. This means that Flipkart and Amazon, will not be allowed to own or sell through any of their entities. However, there is now conjecture on how these entities or parties could be defined. According to an <a href="https://economictimes.indiatimes.com/tech/tech-bytes/indias-new-draft-e-commerce-policy-to-rein-in-related-parties/articleshow/81502310.cms">ET report</a>, the government at its will could notify and change the definition of these parties. Recently, Amazon’s <a href="https://www.reuters.com/investigates/special-report/amazon-india-operation/">businesses</a> had come under speculation for preferential treatment towards sellers that it had a stake in – Cloudtail and Appario. However, the company had lashed out, calling the report “unsubstantiated, incomplete, factually incorrect”. <cmsannotation type="cmsannotation" annotationid="India’s e-commerce policy – a long time coming" comment="subhead" text="India’s e-commerce policy – a long time coming">India’s e-commerce policy – a long time coming</cmsannotation> The government has put together a group of secretaries to work on the e-commerce policy, who had then sent it to several departments within the government for their views. According to reports, the Department for Promotion of Industry and Internal Trade is also holding consultations with various departments from March 17-19, 2021 to finalize the policy. A draft of the National e-commerce policy was introduced in February, 2019 and in November 2019, yet another draft on consumer protection in e-commerce also came in. The policy has already gone through multiple rounds of deliberations. While homegrown players like Snapdeal, Paytm Mall have, more or less, found this to be a palatable draft, foreign and foreign-funded players like Amazon and Flipkart find it tough to digest. <cmsannotation type="cmsannotation" annotationid="What the Indian e-commerce policy could include" comment="subhead" text="What the Indian e-commerce policy could include">What the Indian e-commerce policy could include</cmsannotation> General rules laid out in the draft released on November, 2019 <ul><li>It shall be a registered legal entity under the laws of India;</li><li>It shall submit a self-declaration to this Department stating that it is in compliance with these guidelines;</li><li>The promoter or key management personnel should not have been convicted of any criminal offence punishable with imprisonment in last 5 years by any Court of competent jurisdiction;</li><li>It shall comply with the provisions of Information Technology (Intermediaries guidelines) Rules, 2011.</li><li>Payments for sale may be facilitated by the e-commerce entity in conformity with the guidelines of the Reserve Bank of India.</li></ul>One of the major problems in the e-commerce sector, deep discounting or predatory pricing will be looked into as well. Anti-counterfeiting measures will be taken to curb the growing menace of fake products. Another important point of the policy is the government's insistence that all local data should be stored in India. The policy also states that e-commerce players cannot directly or indirectly influence the price of the goods or services and must maintain a level playing field. They also cannot falsely represent themselves as consumers or post reviews on their behalf. SEE ALSO: <a href="https://www.businessinsider.in/business/startups/news/stripe-the-most-valued-startup-in-the-us-to-offer-payment-services-to-indias-merchants-after-its-latest-fundraise/articleshow/81504106.cms">Stripe, the most valued startup in the US, to offer payment services to India’s merchants after its latest fundraise</a> <a href="https://www.businessinsider.in/stock-market/news/the-us-dollar-is-expected-to-get-stronger-thats-good-news-for-indian-it-services-but-not-for-many-others/articleshow/81511223.cms">The US dollar is expected to get stronger⁠ — that's good news for Indian IT services but not for many others</a>

Amazon and Flipkart may have a new headache as India’s e-commerce policy could also question their algorithms

<ul><li>Amazon India is converting its biggest sellers into wholesale companies in to order to be compliant with India’s new e-commerce rules. </li><li>Cloudtail and Appario — two of Amazon’s largest vendors —- will sell to a battery of third-party ‘preferred’ vendors according to reports. </li><li>Some of the items that are sold by Cloudtail and Appario are currently unavailable on Amazon India as the company changes its affiliates’ business models.</li></ul>Some items might be unavailable on Amazon India right now but that will soon change as Amazon India is reportedly turning two of its largest vendors — Cloudtail and Appario — into wholesale companies. In order to be compliant with India’s new e-commerce rules — that bars e-commerce companies from selling products supplied by affiliate companies on their shopping sites — Amazon is going to start selling via vendors instead of selling directly to customers <a href="https://tech.economictimes.indiatimes.com/news/internet/amazon-plans-wholesale-makeover-to-become-ecommerce-fdi-compliant/67826264">according</a> to a report by ETtech. Retail to wholesale The e-commerce policy only dictates that e-commerce giants like Amazon India can’t sell products to customers if it the vendor supplying the product is a company in which Amazon has stake. While Cloudtail is a 49-51 joint venture between Amazon and Catamaran India, Appario is a 49-51 joint venture between the online e-commerce giant and the Patni Group. If Cloudtail and Appario were to become wholesale vendors instead, then they would only be supplying their products to third-party ‘prefered’ vendors through Amazon Business in India — Amazon’s Indian B2B marketplace. These third-party ‘preferred’ vendors would then sell those products on the Amazon India portal. Every wholesale vendor has the right to pick its preferred retailer for the products they are selling. Sources told ETtech that Amazon hasn’t completely set aside the idea to sell off its stake to order to comply with the new guidelines, but the wholesale route is a faster process, it will comply with the new forms and Amazon still continues to enjoy the value from the both the companies. The good news for consumers is that items supplied by Amazon will still be available on the site. Category managers at Amazon india are currently figuring out which vendors are ‘preferred’ sellers for each of the brand’s categories. The Amazon Echo smart speakers are still on sale, even though Appario is no longer the supplier. Other brands should be live in the marketplace soon once the business model has been realigned. The new guidelines were issues on December 26 after which, both e-commerce giants — Walmart and Amazon — teamed up to seek an extension of the February 1 deadline but with no success. Local e-commerce players are looking forward to the much anticipated relief from competing against deep discounts and traditional retailers are hoping to regain some market share. See also: <a href="https://www.businessinsider.in/the-indian-government-just-dealt-a-serious-surprise-to-amazon-and-flipkart-heres-what-that-means-for-online-shoppers/articleshow/67272151.cms">The Indian government just dealt a serious surprise to Amazon and Flipkart — Here’s what that means for online shoppers</a> <a href="https://www.businessinsider.in/amazon-walmart-owned-flipkart-set-back-by-new-e-commerce-rules-that-help-mukesh-ambanis-reliance-retail/articleshow/67751026.cms">Mukesh Ambani may be the surprise winner from India's new rules hurting Amazon and Walmart</a> <a href="https://www.businessinsider.in/indias-new-e-commerce-policy-has-rivals-flipkart-and-amazon-teaming-up-to-counter-the-new-directive-and-the-republic-day-sale-will-probably-be-their-last/articleshow/67366996.cms">India’s new e-commerce policy has rivals Flipkart and Amazon teaming up to counter the new directive — and the ‘Republic Day’ sale will probably be their last</a>

Amazon may have found a way around India’s new e-commerce rules

<ul><li>The <keyword id="6354977" type="ORGANIZATION" weightage="20" keywordseo="Supreme-Court">Supreme Court</keyword> stayed a National Company Law Appellate Tribunal (<keyword id="6396355" type="ORGANIZATION" weightage="20" keywordseo="nclat">NCLAT</keyword>) order that made way for a probe against the e-commerce giant for alleged abuse of dominant position. </li><li>The Chief Justice of India Sharad Arvind Bobde-led bench has sought a reply from the Competition Commission of India (CCI).</li><li>The NCLAT order from March had allowed the CCI to launch a probe against the e-commerce giant.</li></ul>Some relief came in for Indian e-commerce giant <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword> as the Supreme Court stayed a National Company Law Appellate Tribunal (NCLAT) order that made way for a probe against the e-commerce giant for alleged abuse of dominant position. According to Bar &amp; Bench, the Chief Justice of India Sharad Arvind Bobde-led bench has sought a reply from the Competition Commission of India (CCI). During the court <a href="https://www.devdiscourse.com/article/technology/1358278-sc-stays-nclat-order-for-cci-probe-against-flipkart">proceedings</a> on December 2, 2020, Senior Advocate Harish Salve representing Flipkart said that Amazon being a competitor, is not a dominant player, which means that predatory pricing doesn’t apply to Flipkart as well. He said, “predatory pricing is an issue to be considered against the dominant player as a case of abuse of power but his client has not been held as a dominant player.” Salve added that the “CCI didn’t look at the findings of the Government and instead relied on the tax department findings, thus misread the findings of the tax tribunal.” The NCLAT order from March had allowed the CCI to launch a probe against the e-commerce giant. The order was based on the allegations made by All India Online Vendors’ Association (AIOVA). The Indian e-commerce giant has often come under scrutiny, along with its US-based rival Amazon, for predatory pricing, deep discounts and more, from India’s various trade associations. An e-commerce policy from the Indian government is still in the works to regulate India’s booming e-commerce sector. The case so far: Flipkart vs AIOVA The AIOVA had moved the CCI in March 2018 and stated that “that small vendors have become allies of the big vendors and suppliers to leading sellers such as Cloudtail, WS Retail etc. on the Flipkart and Amazon platforms, rather than selling directly to consumers through the online e-commerce marketplace sites.” CCI had then absolved Flipkart of any such allegations. “...looking at the present market construct and structure of online marketplace platforms market in India, it does not appear that any one player in the market is commanding any dominant position at this stage of evolution of the market,” the order had said then. Following the plea to CCI, the AIOVA had moved the NCLAT in January 2019.

Breather for Flipkart as Supreme Court stays order for CCI probe over alleged abuse of dominant position

<ul><li><keyword id="18635" type="CITY" weightage="20" keywordseo="Amazon">Amazon</keyword>, <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword> have filed their respective pleas and the matter is likely to be heard this week.</li><li>Lobby groups and Indian traders have accused the e-commerce giants of business malpractices and policy violations.</li><li>A report published earlier this year had highlighted that only two sellers made about one-third sales on Amazon.</li></ul>Walmart-owned homegrown e-commerce giant Flipkart and rival Amazon have separately challenged Competition Commission of India’s (CCI) decision to launch an antitrust investigation into their business practices. Notably, the companies have denied any wrong doings in their respective appeals. The antitrust investigation would look into the alleged policy violations and anti-competitive behaviours by both Amazon and Flipkart. Flipkart filed its appeal on June 16 in the Karnataka High Court. Details of Amazon’s appeal are not out yet. The development was first <a href="https://www.reuters.com/world/india/walmarts-flipkart-challenges-india-court-order-antitrust-probe-sources-2021-06-17/?utm_source=Twitter&amp;utm_medium=Social">reported</a> by Reuters citing sources it did not name. The publication has further revealed that both the matters will be heard by a two-judge panel this week. "Irreparable injury will be caused to the appellant if the investigation was to continue pending the present appeal," Flipkart reportedly said in its appeal and urged the court to quash the initial CCI order for the investigation. Amazon, too, mounted similar challenges. Meanwhile, sources aware of the development told the publication that CCI planned to speed up the investigation on big tech players this week. The competition watchdog also plans, as per the report, to demand information from Flipkart and Amazon, based on the accusations raised on their business models. Several lobby groups like the Confederation of all India Traders (CAIT), All India Online Vendors Association (AIOVA) have accused these e-commerce giants of eating into their business with predatory policies, deep discounting and business malpractices. The associations have also called them out for violating Foreign Direct Investment (FDI) policy, Foreign Exchange Management Act (FEMA) and devoiding the government of taxes. Another <a href="https://www.reuters.com/investigates/special-report/amazon-india-operation/">report </a>published in February 2021 had highlighted similar violations on the part of Amazon. The report noted that two sellers — Cloudtail and Appario — in which Amazon had indirect stakes made up around 35% of the platform’s revenue through sales in 2019. Overall, just 35 sellers on Amazon accounted for roughly two-thirds of all sales. This indicated a violation of Press Note 2 of FDI policies that bars e-commerce companies from giving preferential treatments to certain sellers. India’s federal financial crime-fighting agency Enforcement Directorate (ED) was also considering taking a look into these allegations after the Reuters’ report was published in February. In January 2021, ED along with the Reserve Bank of India (RBI) and ED were directed by the Department of Promotions of Industry and Internal Trade (DPIIT) to take “necessary actions” against Amazon and Flipkart for flouting FDI and FEMA rules. The DPIIT’s direction of January 2021 was an aftermath of the protest and issues highlighted by CAIT. The association has also written to Piyush Goyal, the union minister of industry and commerce, seeking stricter actions against Amazon and Flipkart, “which are hell bent in monopolising e-commerce and retail trade with their unethical business practices”. SEE ALSO: <a href="https://www.businessinsider.in/business/startups/news/browserstack-has-become-the-most-valued-vc-backed-saas-company-to-enter-the-indian-unicorn-club/articleshow/83599403.cms">BrowserStack’s unicorn status further strengthens India’s SaaS club</a> <a href="https://www.businessinsider.in/education/news/cbse-evaluation-criteria-for-class-12-results-announced-results-to-be-declared-on-june-31/articleshow/83598782.cms">CBSE announces 30:30:40 formula as the evaluation criteria for class 12, results to be declared on July 31</a> <a href="https://www.businessinsider.in/tech/apps/news/battlegrounds-mobile-india-download-link-early-access-registration/articleshow/83597180.cms">Battlegrounds Mobile India beta now available, early access rolling out – download and registration links here</a>

As Flipkart and Amazon try to quash India's antitrust investigation, trader lobbies accuse them of 'monopolising e-commerce'

<ul><li>Morgan Stanley has warned that Walmart may exit from Flipkart. </li><li>India’s new e-commerce rule brought in tighter FDI guidelines in order to boost Indian marketplaces. </li><li>Under new rules, Flipkart will have to do away with 25% of its products on the platform.</li></ul>Walmart’s biggest ever deal in history could soon be a thing of the past. Walmart’s acquisition of Indian unicorn Flipkart for $16 billion was one of the world’s biggest e-commerce deals. It now stands in jeopardy as the retail giant could make an exit from Flipkart in the wake of India’s <keyword id="7170085" type="UNKNOWN" weightage="20" keywordseo="new-e-commerce-rules">new e-commerce rules</keyword>, according to a report by <a href="https://economictimes.indiatimes.com/industry/services/retail/morgan-stanley-warns-walmart-may-exit-flipkart-post-new-fdi-rules/articleshow/67843595.cms">Morgan Stanley</a>, which said an exit by Walmart is not out of the question with the Indian e-commerce market becoming “more complicated.” “Despite the recent changes in regulations, we remain optimistic abo the ecommerce opportunity in India given the size of the market, the low penetration of ecommerce in the retail channel and the pace at which it is growing. As Walmart scales in India, the company will continue to partner to create sustained economic growth across agriculture, food and retail. Future investments will support national initiatives and will bring sustainable benefits to the country,” a Walmart spokesperson told <a href="https://economictimes.indiatimes.com/industry/services/retail/morgan-stanley-warns-walmart-may-exit-flipkart-post-new-fdi-rules/articleshow/67843595.cms">ET.</a> India’s new e-commerce rules have introduced tighter guidelines that govern Indian e-commerce companies. With the new rules, global players like Amazon or the Walmart-Flipkart entity, are barred from selling products from vendors they have own a stake in. According to the Morgan Stanley report, Flipkart will have to do away with 25% of its products on the platform. The new rules have mounted tremendous pressure on both Amazon and Flipkart, which together command over <a href="https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/amazon-india-reportedly-closing-in-on-flipkart/articleshow/63407725.cms">60%</a> of the market share in Indian e-commerce. According to a report in <a href="https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/amazon-flipkart-sales-fall-a-third-as-fdi-norms-kick-in/articleshow/67826139.cms">ET</a>, Amazon and Flipkart saw a third of their sales volume disappear in just three days, after the new rules came in. Last week, Amazon <a href="https://www.businessinsider.in/amazon-india-finds-way-around-new-e-commerce-rules-for-cloudtail-and-appario/articleshow/67831376.cms">reportedly</a> already began removing several items from its website sold via its vendor Cloudtail including products under the brand name “Amazon Basics”. Walmart which has <a href="http://fortune.com/2018/02/20/walmart-ecommerce-3/">failed</a> to make an impact on e-retail globally, had placed its bets on Flipkart to start off its digital wing. Flipkart being one of the biggest e-commerce platforms of India, put Walmart in direct competition with Amazon. However, with the change in scenario it is possible that Walmart might not want to incur a <a href="https://www.bloombergquint.com/technology/walmart-expects-flipkart-to-suffer-rs-5300-crore-loss-this-year#gs.JsJmhTUD">loss</a> in India. See Also: <a href="https://www.businessinsider.in/amazon-india-finds-way-around-new-e-commerce-rules-for-cloudtail-and-appario/articleshow/67831376.cms">Amazon may have found a way around India’s new e-commerce rules</a> <a href="https://www.businessinsider.in/amazon-and-walmart-which-owns-flipkart-stocks-on-sale-as-indias-new-e-commerce-policy-kicks-in/articleshow/67807890.cms">The sale on Amazon and Walmart stocks in US may worsen as new India's e-commerce rules kick in</a> <a href="https://www.businessinsider.in/amazon-walmart-owned-flipkart-set-back-by-new-e-commerce-rules-that-help-mukesh-ambanis-reliance-retail/articleshow/67751026.cms">Mukesh Ambani may be the surprise winner from India's new rules hurting Amazon and Walmart</a>

Walmart could exit from Flipkart because of India’s new FDI rules: Report

Indian e-commerce players such as <a href="http://www.businessinsider.in/searchresult.cms?query=flipkart&amp;sortorder=effectivedate">Flipkart</a>, <a href="http://www.businessinsider.in/searchresult.cms?query=amazon&amp;sortorder=effectivedate">Amazon</a> will not be able to comply with few of the <a href="http://www.businessinsider.in/searchresult.cms?query=fdi+in+marketplaces&amp;sortorder=effectivedate">government’s new guidelines for the marketplaces</a>. 
 
They will not be able to meet the recent regulation to cap any vendor on their platforms at 25 per cent of total sales. 
 
"It is an accounting issue that normally has to be collated at the end of the fiscal year. The 25 per cent data can be given over a period of time and not immediately," ET quoted sources as saying. 
 
READ ALSO: <a href="http://www.businessinsider.in/100-FDI-in-ecommerce-Cheers/articleshow/51602770.cms">100% FDI in ecommerce! Cheers</a> 
 
The 25 per cent rule has left many startup owners in lurch, especially those who have over 25 per cent threshold on their portfolio. 
 
For instance, Amazon India’s one of the largest vendors is Cloudtail. 
 
"We would not like to speculate on the share of Cloudtail or any other seller till we close our books for the year and given how recent the Press Note 3 is. We will put a process in place to inform sellers in case they are close to or likely to breach the 25 per cent guidance," an Amazon India spokesperson said in an emailed reply to ET. 
 <keyword id="6354742" type="COMPANY" weightage="40" keywordseo="Flipkart">Flipkart</keyword> is reported to trim the contribution of WS Retail in next one year to meet the new guidelines. 
 Meanwhile, <keyword id="541988" type="COMPANY" weightage="40" keywordseo="SnapDeal">Snapdeal</keyword> is meeting the 25 per cent norm. 
 
"Snapdeal has nearly 300,000 sellers from across India. Given the span and depth of our seller base, even the bigger ones account for much less than the 25 per cent threshold mandated for any single seller," Snapdeal spokesperson told ET. 
 
(Image: Thinkstock)

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