New Delhi: In September 2014, the last time Jeff Bezos came to India for an important trip, the CEO of Amazon wanted an elephant for a photo-op, but settled instead for an Indian lorry decked out in garlands.
Brandishing a $2-billion cheque for the cameras, Bezos had come at a crucial time. The online retail giant had been in India for a year and needed a decisive push, both in terms of capital and trust from Seattle, to help it beat home-grown competitor Flipkart.
Six years later, and Amazon is very close to doing so, but Bezos is facing a decidedly more frosty welcome this time around.
For one, the company is facing significant swadeshi resistance by a vocal section of India’s small businesses, whose interests are being closely watched by the Narendra Modi government.
Thousands of trader associations, small retailers, distributors and mobile phone shop owners are expected to stage protests across the country on Wednesday over hefty discounts given by online retailers like Amazon.
“January 15 will see a huge protest of traders across the country under the banner of Confederation of All India Traders (CAIT) in association with All India Mobile Retailers Association, All India Consumer Products Distributors Federation and more than 5,000 trade bodies which will be participated by lakhs of traders all over India,” CAIT said in a recent statement.
“Traders across the country will observe January 15 as National Protest Day under which Jeff Bezos’ visit will be strongly opposed by gathering of traders.”
“Predatory pricing, deep discounting, loss funding, and exclusivity—all these points are what we are taking forward as part of our protests,” CAIT secretary Praveen Khandelwal said.
Competition probe
Another source of potential trouble for Amazon is the Competition Commission of India (CCI), which coincidentally announced this week that it was opening an antitrust investigation into both Amazon and Flipkart.
The competition regulator’s probe was prompted by complaints from small trader associations like CAIT, who allege that the online retailers engage in predatory pricing and also give preference to some sellers on their platform, particularly in those it which holds an equity stake (like AmazonBasics luggage).
In its 11-page order, the CCI noted four alleged anti-competitive practices: exclusive launch of mobile phones by the e-commerce firms, promoting preferred sellers on their websites, deep discounting practices and prioritising some seller listings over others.
“Exclusive launch (of mobile phones) coupled with preferential treatment to a few sellers and the discounting practices create an ecosystem that may lead to an appreciable adverse effect on competition,” the order said.
In response to the CCI’s announcement, Amazon has said that it welcomes the opportunity to address all allegations. “We are confident in our compliance, and will cooperate fully with CCI,” the company said in a statement on Monday night.
The CCI has announced it will open an antitrust investigation into both Amazon and Flipkart. Photo: Reuters
Value or no value
The broader take-away for e-tailers though is that the Modi government’s political interests line up well with the anger expressed by CAIT and other small traders, who are an important vote-bank for the Bharatiya Janata Party.
In October 2019, in an unusual public exchange, commerce minister Piyush Goyal and US commerce secretary Wilbur Ross clashed over why Amazon had reduced its investments in India.
At the time, news broke that the company had invested only Rs 2,800 crore in its India marketplace unit that year, which is roughly one-third of what it did in 2018 (Rs 9,450 crore).
Also Read: Why did Amazon Cut its India Investments? Piyush Goyal and Wilbur Ross Have Different Reasons
While it’s possible that Amazon had front-loaded its investment for the country, thus entailing less capital expenditure from here on out, Ross believed that India’s new e-commerce policy was to blame.
In response, Goyal was blunt, noting the Centre was clear on its “domestic and political compulsions” with regard to small retailers. The commerce ministry wryly also pointed out that perhaps Amazon recognised it cannot do things that it was “possibly doing earlier”, in a pointed dig at the allegations of predatory pricing.
Some of the allegations around heavy discounting could be sour grapes, but it’s clear that festival sales have drawn the ire of small traders the most. During Diwali in 2019, small trader associations claimed that they saw as much as a 60% drop in consumer good sales – mirroring the broader slowdown in the economy – whereas Amazon and Flipkart boasted about how they had racked up record revenue during the six-day festival.
The seeds of the CCI investigation were sown back then, with Goyal sternly noting at the time that “e-commerce companies have no right to offer discounts or adopt predatory prices.”
“Selling products cheaper and resulting the retail sector to incur losses is not allowed,” the commerce minister said.
Company executives and even a few commerce ministry officials admit that Amazon is a useful punching bag. Over the last few years, the issue of ‘anti-national’ products being sold on its platform have cropped up a number of times.
In 2017, the online retail giant was forced to apologise and remove doormat products that contained an image of the Indian flag after the-then external affairs minister Sushma Swaraj threatened diplomatic action.
If this is not done forthwith, we will not grant Indian Visa to any Amazon official. We will also rescind the Visas issued earlier.
— Sushma Swaraj (@SushmaSwaraj) January 11, 2017
A few weeks after that, the-then economic affairs secretary Shaktikanta Das, who is now the governor of the Reserve Bank of India, tweeted a stern warning against the American firm over how flip-flops were being sold that had pictures of Mahatma Gandhi on them.
“Amazon, better behave. Desist from being flippant about Indian symbols & icons. Indifference will be at your own peril,” Das, tweeted in response to viral images of the $17 pair of footwear.
Coincidentally, Jeff Bezos’ first visit after he landed in Delhi on Tuesday evening was to pay tribute to Mahatma Gandhi at the Raj Ghat Memorial located in the national capital.
“Just landed in India and spent a beautiful afternoon paying my respects to someone who truly changed the world,” Bezos posted on Twitter. “Live as if you were to die tomorrow. Learn as if you were to live forever,” the tweet read, quoting Gandhi.
In response perhaps to the on-and-off protests by small trader associations over the last few months, Bezos is expected to attend Amazon’s two-day event in Delhi for small and medium businesses.
Called ‘Smbhav’, the event will see the participation of senior retail industry captains like Kishore Biyani and will be Amazon’s chance to quell the concerns of small business owners.
It is unclear at the moment whether Bezos will meet Modi on Wednesday before leaving to Mumbai, with sources saying the Amazon CEO will definitely be meeting senior government officials.
