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Amazon Begins Pulling Products From Its India Site as Local Government's Strict New Policies Go Into Effect (venturebeat.com)
An anonymous reader writes: Amazon and Walmart have been dealt a big blow in India, one of their most important markets, after the local government today declined a request to extend the deadline for the implementation of revised rules regarding how foreign ecommerce platforms sell goods and conduct business in the country. The local government, which revised its ecommerce policies late December, prohibit Amazon and Flipkart from selling goods from companies in which they have a stake. The two companies were hoping the Department of Industrial Policy and Promotion, the government agency that issued the revised policies, would extend the February 1 deadline. But efforts to gain more time were unsuccessful. (At around 6:50 p.m. local time -- 8.20 a.m. Pacific, the government said it won't be extending the deadline.)
Under the current laws, foreign-owned ecommerce companies are not allowed to sell directly to customers (in other words, to operate under an inventory-based model of ecommerce). Instead, they can only provide a marketplace that acts as "an information technology platform" and serves as a facilitator between "buyer and seller." To bypass this restriction, both Amazon and Flipkart, which sold a majority stake to Walmart last year, have acquired stakes in some of the biggest third-party sellers in the country. For instance, Amazon owns stake in parent companies of Cloudtail India and Appario Retail, while Flipkart until recently controlled WS Retail, the largest seller on its platform. The local government's revised policies fixed that loophole.
Starting at 1.30 am Friday local time, several Amazon-owned products, including select Echo smart speakers, as well as some travel bags, batteries, and chargers under Basics brand, have become unavailable on Amazon's website.
Under the current laws, foreign-owned ecommerce companies are not allowed to sell directly to customers (in other words, to operate under an inventory-based model of ecommerce). Instead, they can only provide a marketplace that acts as "an information technology platform" and serves as a facilitator between "buyer and seller." To bypass this restriction, both Amazon and Flipkart, which sold a majority stake to Walmart last year, have acquired stakes in some of the biggest third-party sellers in the country. For instance, Amazon owns stake in parent companies of Cloudtail India and Appario Retail, while Flipkart until recently controlled WS Retail, the largest seller on its platform. The local government's revised policies fixed that loophole.
Starting at 1.30 am Friday local time, several Amazon-owned products, including select Echo smart speakers, as well as some travel bags, batteries, and chargers under Basics brand, have become unavailable on Amazon's website.
...They have not pulled the poetry from my kindle fire
That's taking protectionism to the extreme. Not even a high tariff, but just a "nope". Interesting times.
Socialism: a lie told by totalitarians and believed by fools.
The megaretailers devised a workaround to avoid Indian protectionist trade policies, and the government closes the loophole that allowed Walmart & Amazon to exploit the intent of the legislation.
Unless your beef is with a developing nation's right to grow domestic industry, this is what noncorrupted government is supposed to do.
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We should take a lesson from this. This is bad news for giants that the little guy is too small to compete against. But it is wonderful news for startups who no longer need to compete against giants funded by billion dollar tax grants.
So now that the foreign companies don't need stakes in local retailers to use this old loophole, will they be fire-selling them since they don't need them anymore?
India is one of the most lucrative new e-markets in the world, and it would be a shame to allow dishonest American corporate giants control that market. In particular since it could (and would, given America's track record) be used to levy political pressure on India when you control a large part of their market.
These American companies can simply hire Americans to spam call India 24/7 to push these products directly.
I'm sure India won't mind getting billions of spam calls.
this isn't about protectionism, this is about preventing a potentially hostile company from monopolizing, well, everything.
Amazon has been allowed to run at profit margins that no other company every would be because investors are waiting for the day when they put literally everyone out of business. When that happens it'll be like a company store on a national or global basis.
India is right to worry about that. It's crazy that the rest of the world isn't.
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This has to be one of the best ideas I have read
Does this mean Amazon can't sell Kindle or Alexa devices in India? Or that they can only sell them through a competitor's site?
Competition is in general a worthy objective. Likewise democracy. Populist actions support getting elected. Education is important for constituents to choose a system that has best chance for society to sustain. The down side near term is reduction in capital and accompanying innovation, and efficiency. While the door swings both ways the benefactors in India on this matter are not getting much overseas business. The large multinationals software, call centers will need to reconcile with their small businesses. Get along folks. Cooperation is also important vs ruthless competition.
Never thought I'll defend Indian government action, but here goes something that might appear to be a defence (it is not) :
Amazon is :
1. Refusing responsibility of being a seller when buyer demands the service any seller is required to provide
2. Undercutting the actual brick-and-mortar sellers - not only by its economy of scale but by subsidizing the supply-chain of the "sellers" on its platform. So the actual sellers who are providing the necessary services are shutting shop
All sellers are supposed to choose one of the 2 models :
1. Be a seller : then take all responsibility of being a seller
2. Enabling other sellers : then don't sell your own stuff, and don't subsidize your sellers in any way.
I am not even saying this regulation is the best, or above average, response to the situation. But protectionism it is not.
Bingo Dictionary - Pragmatist, n. A myopic idealist.
They have 2 options :
1. Either be a seller : only sell your own stuff and take full responsibility / position that a seller takes including warranty, returns, tax position, liability etc. E.g. Amazon could sell only Kindle, Alexa, Prime movies , Fire devices (??)
2. Or "provide a technology platform" to sellers as they call it - and offer no supply chain support to sellers, never sell Amazon branded products, and not have to worry about liability, returns, warranty etc.
Bingo Dictionary - Pragmatist, n. A myopic idealist.
normally investors would be putting massive pressure on Amazon to increase profits. This would normally mean Amazon would do short term, boneheaded stuff that brought in cash but hurt them in the long wrong (or that didn't bring the cash in but they thought would).
Amazon has been free of that pressure. They're profitable but they could (in the short term) be _more_ profitable. To an investor that's usually all that matters.
The reason it's worse for Amazon to mix their stuff is that they have a disproportionate amount of power and can and will leverage that power. That's the essense of monopoly. The time to act against a monopoly is before they control everything.
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