Amazon’s founder and CEO, Jeff Bezos will be visiting India in January, and his schedule might include a meetup with Prime Minister Narendra Modi. During his trip, Bezos will initiate an annual event around small and medium retailers. The event holds significance, since these small and medium retailers are currently in protest mode against Bezos’ e-comemrce giant.
The eCommerce behemoth is said to be worried with the changing rules and environment of online retail market in India, where the company has vested $5 billion to create one of its largest foreign subsidiaries. Bezos is coming to address the protest from the small traders against foreign funded eCommerce companies. He is likely to highlight the job opportunities the company has generated in the country, apart from stabilizing and strengthening small businesses by providing a stable platform.
In response to queries regarding the CEO’s visit, a spokesperson said; “We do not have any plans to share at present for this.”
The protest against India’s biggest e-commerce behemoths gained substantial pace after Diwali, when small traders accused Flipkart and Amazon for “unfair business practices” and violation of foreign direct investment rule. The predatory pricing strategy of the foreign funded companies were accused to swoop the traditional retail market of the festival.
As per Red Seer Consulting, Flipkart and Amazon cumulatively did a sale of 31,000 crore ($4.3 billion) in the 15 day festive period.
Alarmed with the protest, the government has began to scrutinize both the companies for their compliance with India’s foreign direct investment laws for eCommerce marketplaces. Amazon and Flipkart have been asked to present details on this, including their shareholding, subsidiaries, business structure and data on their top sellers along with their tax details.
Both Amazon and Flipkart have agreed to comply with the FDI legislation.
Looking at the huge business perspective which India brings to the eCommerce giant, Amazon has its reasons to take these protests and legislation seriously. Amazon has agreed that India is their largest growing market, having potential to reach $10 billion in gross merchandise value, making it the company’s largest foreign subsidiary. Thus far, Amazon has invested $5 billion in India.
Right after Walmart’s acquisition of Flipkart, India amended its FDI rules, removing many flaws, which the Government believed could have been misused by Amazon and Flipkart. Both the companies largely rely on inventory based virtual eCommerce which is prohibited in the country.
A legislation called Press Note 2, decreased bulk purchases from any vendor or entity by 25%. This was a strong blow to both Amazon and Flipkart, as their sales relied entirely on independent vendors or huge partner entities .
