Amazon India Accused of Favouring its Subsidiary Merchants, Small Sellers Boycott Super Sale Events

As Flipkart and Amazon India begin their festive season sales this week, the All India Online Vendors Association (AIOVA) on Friday filed a petition with antitrust regulator, Competition Commission of India (CCI), alleging that the Amazon India favours merchants that are its subsidiary, such as Cloudtail and Appario.

While Appario Retail Pvt Ltd is a wholly-owned subsidiary of the joint venture between Amazon India Ltd and Ashok Patni, the co-founder of Patni Computer System, Cloudtail, which is the largest seller on Amazon India, is a joint venture between Amazon Inc. and Infosys co-founder N.R. Narayana Murthy’s Catamaran Ventures.

AIOVA, which represents more than 3,500 online sellers, said that large sellers partly owned by Amazon India such as Cloudtail and Appario are being given preferential treatment by charging significantly less than Amazon's advertised rates for other sellers.

AIOVA has asked CCI to impose a "severe penalty" for unfair practices and to restrict what it says are "preferred sellers" from participating in Amazon India's annual festival sales, which start this week.

Amazon India however has denied the accusations ad said that all sellers on its platform are treated equally.

“Amazon has an equal relationship with all the sellers on our marketplace,” Amazon India spokeswoman Bhumika Shah said in an email to Reuters, adding that the company is “absolutely committed” to compliance with local laws.

Besides Amazon, Flipkart too has been accused of giving preferential treatment towards large sellers such as WSRetail, which is Flipkart's subsidiary merchant.

Meanwhile, several small merchants have decided to nearly-boycott the upcoming festive season online sale events this year by not to actively participate in the e-commerce giants’ flagship events. Both Flipkart and Amazon India have scheduled their flagship sales—Big Billion Days and Great Indian Festival, respectively—to begin on October 10.

Earlier this year in May, AIOVA had filed a similar petition accusing Flipkart of preferential treatment towards big sellers, enabling them to provide huge discounts, hurting the business small and medium sellers.

In interactions with nearly a dozen online sellers, ET has also reported that small sellers have reduced their activity on Flipkart and Amazon India because of the e-commerce companies’ seeming preference to vendors such as RetailNet, Super-ComNet, OmniTech Retail (Flipkart), Cloudtail and Appario (Amazon India), and their own brands.

~ Reuters

[Top Image - bnnbloomberg.ca]

ED Issues Notice To Flipkart For Its Billion-Day Sale, May Slap Rs1000 Crore Penalty

Its seems like Flipkart's BigBillion Day Sale Blunder will last for some more time in news. In a most recent update and setback to Flipkart, ED (Enforcement Directorate) may soon impose a penalty on e-commerce giant after it conducted a probe on the company's trade practices. According to sources the amount of penalty may goes upto Rs.1000 crore.

On 6th October, Flipkart announced Big Billion Day sale where many customers reported that just before the sale goes up, all of sudden the prices of many of Flipkart's products were raised and then discounted which even after discounts are way higher than their regular prices. A day after sale, Flipkart however apologized to its customers for all glitches and clarified that higher prices of some of its commodities are due to technical errors which beyond control.

Moreover, ED, which probes financial irregularities, mainly money laundering and foreign exchange rule violations, is also probing other e-commerce companies such as SnapDeal.com and Amazon India.

There were many complaints from traders on Flipkart's massive discount sale on 6th October 2014. The government had assured that it will look into the concerns and take a call on whether more clarity is required on e-commerce retail business.

"We have received many inputs. Lot of concerns have been expressed. We will look into it," Commerce and Industry Minister Nirmala Sitharaman had said.

As per Hindustan Times, a highly placed sources at Enforcement Directorate said - "The quantum of irregularity has been calculated. The investigation is still on. We are yet to fix a penalty. We are probing other businesses as well because of which we cannot reveal what we have learned about Flipkart…It will alert others,” he said on condition of anonymity.

Flipkart has always been in the eyes of ED, earlier in August this year Enforcement Directorate slapped a show-cause notice on Flipkart over alleged FEMA violation. Also in 2013, a year after ED's probe began, Flipkart changed its business model, allowing buyers and sellers to deal independently through its platform.

Flipkart Apologize For #BigBillionDay Sale Blunder

Yesterday we published how Flipkart created blunder with #BigBillionDay Sale on 6th October 2014. Lot of hue & cry was propagated by its customers in social media sites as how Flipkart all of a sudden raised price of its products and discounted thereafter which was still higher than regular prices of various products available on Flipkart.

Now lately, Sachin and Binny Bansal have sent their apologies to its customers on Flipkart Blog. In a statement given in a blog post Founders of Flipkart said - "we did not live up to the promises we made and for that we are really and truly sorry."

"Though we saw unprecedented interest in our products and traffic like never before – we also realized that we were not adequately prepared for the sheer scale of the event. We didn't source enough products and deals in advance to cater to your requirements. To add to this, the load on our server led to intermittent outages, further impacting your shopping experience on our site." added Sachin & Binny.

They also said that - "An unprecedented 1.5 million people shopped at Flipkart yesterday. While we stand humbled by the sheer faith that such a large number of customers have shown in us, we are unhappy that we were unable to live up to the expectations of millions more who wanted to buy from us yesterday."

About havoc created by drastic price changes on Flikart Bansals duos said - "As we were preparing various deals and promotional pricing in the lead up to the sale, the pricing of several products got ​changed to their non-discounted rates for a few hours​. We realise that this breaks the trust our customers have put in us. We are truly sorry for this and will ensure that this never happens again."

With this blog post for its customers Flipkart.com team has tried to answer all the questions raised by customers on social media platforms.

In a closing statement of blog post Bansal duos said - "We failed to live up to this promise yesterday and would like to apologise once again to every single customer for our failure."

Read full apology blog post by Sachin & Binny Bansal here.