The two biggest e-commerce players in India, Amazon and Flipkart, have claimed that the losses they incurred in India operations are due to investments dedicated to building infrastructure and technology and not because they have been funding predatory pricing as accused by offline retailers repeatedly.
The e-tailers told the Government that a lot of their budget is going into building a strong network of warehouses and logistics network along with technological advancements.
They also told Department of Promotion of Industry and Internal Trade (DPIIT) that they are fully compliant with the laws of FDI in India.
Amazon even said that contrary to what it was accused of, it does not favour certain sellers and it is making profit at a transaction level.
To reiterate the above, the company said that it has a live price dashboard where sellers can see each other’s price and then independently decide on discount, and the marketplaces have no role in either pricing or discounting.
DPIIT had sent a set of detailed queries to both the marketplaces last month after allegations by Confederation of All India Traders (CAIT) that they had offered deep discounts during the festive season sales, causing offline traders losses as sales dipped 40-50 per cent and violating FDI norms.
Responding to the queries, Flipkart said that a lot of its merchandise is online-exclusive and is made especially for the portal by sellers; therefore accusations of predatory pricing don’t hold ground.
The two marketplaces have explained their business models and other details to DPIIT through written responses as well as in meetings with officials.