Govt probing Flipkart, Amazon over alleged predatory pricing: Piyush Goyal

The government is probing Wal- Mart-owned Flipkart and Amazon over the alleged predatory pricing, commerce minister Piyush Goyal said on Thursday.

Warning of stringent action as per the law for any violation, he said detailed questionnaires have been sent to these companies and their response is awaited. According to media reports, the e-commerce majors have grossed up over $3 billion in gross merchandise value during the festive sales held over the past fortnight, which typically see over half of their annual sales.

"E-commerce companies have no right to offer discounts or adopt predatory prices. Selling products cheaper and resulting the retail sector to incur losses is not allowed," Goyal told reporters.

They are also not permitted to own products and sell them, he said and that they are only platforms helping sellers connect with potential buyers. Without specifying the exact transgressions, Goyal said his ministry has received complaints from the traders body CAIT alleging violations of norms by these players.

"A detailed questionnaire has been sent to them. Today or tomorrow, a supplementary questionnaire will also be sent," he said and reminded that he had earlier also warned these e- commerce players.

"We will take stringent action against them, if there is violation of any law in letter or in spirit. The law is clear. Action will be taken as per the law," he said.

The national traders body CAIT had in a letter on Monday urged Goyal to order an audit into the business model of all e-commerce firms and the foreign-owned Amazon and Flipkart in particular. In the letter, CAIT also said since Amazon and Flipkart claim that individual brands are offering discounts, government should convene a meeting with major brands to ascertain the truth.

"The business model of Amazon and Flipkart should be audited by the government to arrive at the real conclusion," it said in the letter.

Following the complaint from the traders body, senior officials of the department for promotion of industry and internal trade had met with Amazon and Flipkart representatives last week.

Goyal scotched rumours that the Railways might exit its ticketing arm IRCTC which had a stellar stock market debut earlier this week following a hugely successful IPO. There is no plan to fully sell IRCTC. This is speculation based on wrong information, he said.

Predatory pricing: Amazon, Flipkart explain discounts to DPIIT officials

The leadership of e-commerce giants Flipkart and Amazon India met officials from the Department for Promotion of Industry and Internal Trade (DPIIT) on the allegations against them of predatory pricing made by the Confederation of All India Traders (CAIT).

The meeting, at the behest of the minister, Piyush Goyal, was convened by Shailendra Singh, additional secretary of the department. Goyal was to have chaired it but his schedule was changed before this.

“We had open and transparent discussion with DPIIT officials. We thank the government and particularly the Ministry of Commerce and Industry for the opportunity,” an Amazon spokesperson said.

According to sources, the two entities explained to DPIIT how discounting works on their platform. At issue was CAIT’s charge that their conduct during the recent festive sales had breached the country’s rules on foreign direct investment (FDI), which stipulates that such entities must only function as a marketplace.

Predatory pricing: Amazon and Flipkart explain discounts to DPIIT

CAIT was also supposed to have a meeting with DPIIT but stayed away on learning that the minister would be unavailable. “Since the minister is fully aware of the matter that was explained to him on Wednesday by CAIT, we intend to hold further dialogues with him only. The court case filed by us against Amazon and Flipkart in the Jodhpur Bench of the Rajasthan High Court will come for hearing on October 15. The Union government, Enforcement Directorate and both companies have to submit their reply on the petition of CAIT before that,” said Praveen Khandelwal, secretary-general of the trader body.

CAIT had on Wednesday taken a delegation to the minister, including heads from the All India Mobile Retailers Association and All India Consumer Products Distributors Federation. “The minister firmly said the government is committed to implement the FDI policy in its letter and spirit. No predatory pricing or deep discounting will be allowed. Any re-routing of business in e-commerce will not be allowed,” Khandelwal had said after the meeting.

CAIT has given various items of evidence on predatory pricing, deep discounting, exclusivity and promoting of preferred sellers on the respective platforms of various e-commerce companies. It had told the minister that much against the FDI policy’s intention, e-commerce entities were greatly influencing the prices and creating an uneven playing field. Their delegation had asked for a government audit of the business models of e-commerce portals, including the amount of business done by sellers and the authenticity of that data. And, that as an interim measure, a ban be imposed on such e-commerce portals.

Festive sale: Tier-II, III cities drive big biz for Flipkart and Amazon

Tier-II and tier-III cities are driving big business for e-commerce firms — Flipkart and Amazon — for the ongoing festival season.

Walmart-owned Flipkart on Monday night said tier-II and tier-III cities ushered in the festive cheer for the firm during the second day of its flagship event ‘The Big Billion Days’ 2019. Electronics category witnessed growth of over 70 per cent from tier-II cities, with a 100 per cent increase in women shoppers from smaller towns. “We witnessed the growing appetite of tier II and III cities for mobiles, large appliances and consumer electronics,” said Kalyan Krishnamurthy, CEO, Flipkart. “As consumers from these cities upgrade, they are coming at par with the metros showcasing unique needs and spending patterns across these categories,” added Krishnamurthy.

Affordability constructs were a big hit. There was over 2X adoption in the ‘product exchange’ construct for mobiles and laptops, according to Flipkart. Within laptops, key segments like gaming and thin and light laptops exceeded 2X as compared to last year, leading to the overall growth of more than 10 per cent in the average selling price of the products.

For Flipkart mobiles saw the share of consumers picking premium smartphones increased by 97 per cent. Close to 70 per cent of customers opted for the pre-paid option for TVs and large appliances. “We are glad that most of our affordability constructs have helped get India and Bharat closer this festive season,” said Krishnamurthy.

Amazon India which is conducting ‘Great India Sale’ said that this festive season affordability programmes such as no-cost EMI, exchange, instant bank discounts and more continue to enable record number of customers to upgrade to premium products.

“With more first-time shoppers from small towns than ever before and tens of thousands of small sellers across India already seeing success, we are excited by how India loves Amazon’s commitment to offer the largest selection, great convenience and exceptional value to its customers,” said Manish Tiwary, vice president - category management, Amazon India. He also said that Amazon.in remains the destination of choice for customers with smartphone brands OnePlus, Samsung, Apple, Xiaomi and retail brands like Shoppers Stop and Max Fashion together selling millions of products already.