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.

Comments

Extreme protectionism

[lgw]

That's taking protectionism to the extreme. Not even a high tariff, but just a "nope". Interesting times.

Re:Extreme protectionism

[misnohmer]

Yep, that seems to be Indian strategy. They want to ban not just foreign companies, but automation too (see https://arstechnica.com/tech-p...).

Re:Extreme protectionism

[tomhath]

The protection is for businesses in India that are paying bribes to local officials.

Re: Extreme protectionism

[reanjr]

AMZN is first and foremost a logistics company.

As designed

[rmdingler]

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.

Re:As designed

[HornWumpus]

They are growing their _prime_ domestic industry: Government worker graft.

Seriously, I bet (if measured) more money in India is spent on bribes than their next biggest single industry. Likely 20+% of GDP.

No more loophole, time to shed local ownership?

[misnohmer]

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?

I disagree

[rsilvergun]

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.

Re:I disagree

[lgw]

Amazon's profits are quite healthy if you don't include spending for for future growth. Ditto AWS. That's what investors are counting on: fat margins once growth slows (it's also why the stock is getting hammered recently: as growth slowed costs went crazy). Amazon's share of retail is in the 5-10% range.

I don't really see how Amazon mixing their stuff with competitors' stuff on their store is somehow worse for consumers than the norm of selling only your own stuff. If JC Penny started selling Amazon Basics alongside their normal brands on their store, would that somehow be worse? But that's what this law targets. Doesn't make sense to me.

Re:I disagree

[Applehu Akbar]

The solution is simple: US companies should be banned from India, and Indian workers should be banned from the US. All H1B workers from India should be deported immediately. Thus the US companies get shafted both ways, but that's a good thing.

Exactly, Mr. Smoot-Hawley. Then if a bunch of other major trading countries does do this, the world plunges into an economic depression.

One small bright spot in that scenario might be that our Democrats will go back to being the party that builds infrastructure to create jobs, rather than being the party that prevents big things from being built.

Re: I disagree

[astrofurter]

"Exactly, Mr. Smoot-Hawley. Then if a bunch of other major trading countries does do this, the world plunges into an economic depression."

Sure, that's what they teach in freshman history class. Unfortunately, it's a lie. Protectionism WORKS. It's working really well for China right now. It worked for many decades in America. It was worked for hundreds of other countries in the past.

The big losers from protectionism are global financiers. You know, the crooks who bought the American government.

Re: I disagree

[Applehu Akbar]

The big losers from protectionism are global financiers. You know, the crooks who bought the American government.

Ah yes, Zee Choose. Fits right in with your favored decade, doesn't it!

Re:I disagree

[bingoUV]

Doesn't make sense to me.

What do you know about the market situation that you expect it to make sense to you ? We can start from there.

Explained a bit in this comment , but other points might need explanation for your specific position : https://slashdot.org/comments....

Alexa and Kindle?

[virtig01]

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?

not protectionism at all

[bingoUV]

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.

Re:not protectionism at all

[lgw]

So, Amazon makes two stores. amazon1.com has only stuff where Amazon is the seller. amazon2.com has only third-party sellers. Everything is golden? Sounds somewhat inconvenient, but given Amazon's failure to clearly indicate what they're the sellers for (to the rising frustration of customers hit by fraud), maybe it's better.

Online killing B&M because customers like it better is a good thing. Businesses have no inherent right to exist beyond the value they bring customers. Clearly the issue is a US company putting Indian businesses under survival stress. This is clearly protectionism, not that that's inherently a bad thing.

Re: not protectionism at all

[bingoUV]

1. It's not golden : the choice is based on shareholding : direct or indirect. Read the law : not that there still can't be loopholes, but they are not as glaring as you point out.

2. Read my post before replying : it is not about the right of a business to exist. It is also not about B&M vs online. It is about taking responsibility of being a retailer if you are a retailer.

Re: not protectionism at all

[lgw]

Amazon takes responsibility for items that they're the seller of.

I still don't see any problem with a company being both a retailer an a marketplace - as long as it's clear which you're interacting with when you buy! Amazon has not been good about that, to be sure.

Re: not protectionism at all

[bingoUV]

What do you know about the situation in India which make you expect to see the problem ?

A few hours ago you deemed yourself qualified to comment on a regulation , of which you did not have the faintest idea.

2 options

[bingoUV]

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.

They're not healthy _enough_

[rsilvergun]

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.

Re:They're not healthy _enough_

[lgw]

normally investors would be putting massive pressure on Amazon to increase profits

Normally? Always, The difference with most of the huge corporations of the 21st century is executives willing to say "you'll get your profits in the distant future, and you'll like it". Focus beyond the next quarter is very rare, no doubt, but is it a bad thing?

Amazon has been free of that pressure.

Why would you believe that? The pressure has always been there. Corps still run by their founders can get away with saying "nope", as long as credibility remains in future profits.

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.

They have less leverage, not more, by allowing third-party sellers. For many years fo course Amazon only sold stuff they procured, just like every retailer. That gave them 100% leverage.

Then they changed to also allow third party sellers, not just on Amazon marketplace but on the main store. Please explain why that change made them (more) evil?