Indian shopkeepers alleged that the e-commerce giants like Amazon and flipkart acquired by Walmart are violating rules with respect to predatory pricing and deep discounting.
As per the allegations by shopkeepers, e-commerce giants are violating these new rules. They demand investigation to Piyush Goyal, Commerce minister.
As Piyush Goyal said, “E-commerce companies have no right to offer discounts or adopt predatory prices. Selling products cheaper, resulting retail sector to incur losses is not allowed.”
The merchants are protesting in New Delhi claiming these giants doesn’t want to do business, they want monopoly and control.
Praveen Khandelwal, National secretary general of the Confederation of All India Traders (CAIT), said, “Basic thumb rule is any e-commerce entity should follow provisions of FDI policy of 2018, both in letter and spirit. If Amazon and Flipkart obey the policy, we have no objection. They can continue with their model provided they follow FDI norms.”
Khandelwal also said that “The CAIT has emails sent by Flipkart and Amazon to sellers, asking them to offer discounts on a sharing basis and reward them with credits.We have evidence to prove that what is happening, is not fair”.
Traders are expected to have attention of government, being a largest voter base of BJP (Bharatiya Janata Party).
Last year, Government tightened rules for foreign e-commerce industry , which states “how shall the platforms are allowed to sell goods”. This rule forced companies like Amazon to pull various items from their virtual shell and restructure their local operations.
Amazon had shut down in China now. Walmart too facing mixed reaction from US market. Thus, these two companies settled in India as a key to growth.
Walmart spend $16 billion to acquire flipkart while amazon spent $5.5 billion to win India.
Both amazon and flipkart claims, it is at seller’s discretion to decide the selling price of their product. These giants simply provide data to determine what product offerings will sell best at what price.
“But in reality, they have exclusive tie-up with some sellers. This is the reason when we search for a product on Amazon or Flipkart, we see a few sellers who are always there on top. In this way, these giants control inventory of seller” well said by National secretary of CAIT, Sumit Agarwal.
In the recent festival season, where traders faced drop in their sales, amazon and flipkart managed to record revenue in just “6 days festival sale”.
Very popular example will be Mobile phones, E-commerce has taken more than 30% of retail sales. This means almost 30% of handsets sold in India are now sold online and not in physical stores. This is only because they are selling below the cost.
Traders are not able to match price of the products online. They are trying to cut down their cost as much as possible but still they are loosing market share day-by-day. If situation remains same, many or all will go out of business.