The ecommerce battleground between Flipkart and Amazon to acquire top position is getting murkier by the day. According to a recent report by ET, a group of online sellers have reached out to the Competition Commission of India with complains against WS Retail (Flipkart) and Cloudtail (Amazon).
The complaint alleges that both the ecommerce giants are using ‘predatory pricing’ and discounting while selling products via their private label products. This, in turn, affects the business of smaller rivals and other online sellers.
As per the report, in a letter dated March 2, 2017, the All India Online Vendors’ Association (AIOVA) said that retailers of private labels AmazonBasics and Flipkart SmartBuy are given special benefits that are undisclosed.
An AIOVA spokesperson said there is “unnatural internal competition, which has been made to destroy competition, capture market, earn revenue by dubious means.” Such predatory pricing has played a major role in the “crash of Snapdeal’s B2C business. Such matters should be investigated by lifting the corporate veil”
The complaint also states that both WS Retail and Cloudtail sell phones, electronics, and FMCG products at ‘rock bottom prices.’
Talking about the allegations, an Amazon India spokesperson said, “We are completely compliant with Indian laws and policies. Prices for products on the Amazon.in marketplace are determined by the sellers. We work hard and continually innovate to offer services such as FBA (Fulfilment by Amazon) and Easy Ship to sellers on our platform, that enables them to significantly lower their cost of selling and reducing defects, as they sell to a nationwide customer base. Sellers pass on these savings as lower prices on the platform.”
Amazon launched its private label brand AmazonBasics, in September 2015 in a bid to expand its Consumer Electronics store.
On the other hand, Flipkart launched its first private label business under an umbrella brand called Flipkart Smart Buy in December 2016.
A Flipkart spokesperson said, “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.”
The AIOVA has been unusually active in early 2017. After news of Snapdeal layoffs was announced in February 2017, a group of online sellers reportedly asked the commerce minister Nirmala Sitharaman to intervene in the matter and safeguard their money that Snapdeal holds, in the form of outstanding dues. At that time, the AIOVA had written to the Minister that Snapdeal holds about INR 200 Cr-INR 300 Cr, on any given month, in the form of outstanding dues and goods in transit or refunds.
Yesterday, Nirmala Sitharaman, Union Minister of State, Commerce & Industry (I/C) stated that she will look into the matter and inquire into the vendors’ complaints of default payments by Snapdeal.
