Amazon documents reveal company’s secret strategy to dodge India’s regulators
Probe: Amazon India favors big sellers on its platform, and uses them to maneuver around rules meant to protect the country's small retailers from getting crushed by e-commerce giants, internal documents show. Amazon rejects this: It says it complies with Indian law, which stipulates that an e-commerce platform can only connect sellers to buyers for a fee.
Amazon has committed more than $5.5 bn in investment in India and has provided an online platform for 400,000-plus Indian sellers. But some 35 of these sellers in India are accounted for around 2/3rds of its online sales. Indian traders, have long alleged that Amazon’s platform benefits a tiny number of big sellers and engages in predatory pricing that has crushed legions of retailers.
Since foreign investment regulations in India bar e-commerce firms from holding inventories of goods and selling them directly to customers, Amazon shook hands with N.R. Narayana Murthy, founder of Infosys Ltd. The venture was used to create a seller named Cloudtail, which began offering goods on Amazon.in. The company has clarified that Cloudtail is an independent seller on its marketplace, however the internsal documents label it as a “SM,” or “Special Merchant.”
“The Special Merchant (SM) was launched in Aug-14 and we helped SM quickly ramp up and gain scale through Q4,” stated an Amazon India report. “Launch, stabilize, grow Special Merchant; make it profitable,” the report said. Amazon helped Cloudtail “acquire key relationships” with major tech companies, including Apple, Microsoft and OnePlus. This included exclusive deals with these companies to sell their products, such as smartphones.