E-commerce giants shouldn’t give big discounts: INDIA COMMISSION

BIG e-commerce firms should not offer steep discounts, must disclose discounting policies and ensure they do not drive brick-and-mortar rivals out of business, India’s antitrust chief said when his commission launched a probe into Amazon and Walmart’s Flipkart.

The remark come ahead of a visit by Amazon’s CEO Jeff Bezos to India this week one likely to marked by much tension with the country’s small business owners planning protests in 300 cities as they step up their campaign against what they see as unfair business practices.

In particular, the shopkeepers accuse the two US giants of indulging in heavy discounts and giving special treatment to select sellers. The Department of Industrial Policy and Promotion issued a clarification to the rules on FDI in e-commerce policy in late December that has caused quite a stir and caused e-commerce platforms such as Amazon and Walmart which has a majority stake in Filpkart to question their long-term investment strategy in India.

All these policies were made in order to help the small retailers from getting exploited from big e-commerce players. While it may help them in the short run, an atmosphere that is not conductive to investment in this sector is bound to hurt them in the long run.

India is the fastest-growing e-commerce market, expected to grow at an annual rate of 51% between 2017 and 2020. It estimates the sector will generate revenues of $120 billion this year. Said by CCI

Openness about discounting policies and how companies use customers data is essential. The commission on Monday said it would be investigating Amazon and Filpkart, noting allegations of deep discounting and promoting “preferred sellers”. Mr Bezos will likely participate in an Amazon event in New Delhi. He has also sought meetings with the prime minister and other government officials

Finally, the decision is bound to hurt the Indian consumers. By limiting the amount of discounts given by the private labels, the consumers want to give a higher price for their purchases.

Amazon has committed US$5.5 billion in India investments, while Walmart in 2018 pumped in US$16 billion to buy a majority stake in Filpkart, its biggest deal. Inorder to prevent large online discounts , groups representing more than 70 million brick-and-mortar retailers say both firms violate India’s foreign investment rules. The CCI said India is the world’s fastest growing e-commerce market, expected to grow at an annual rate of 51%  between 2017 and 2020.