Taking a jibe at the offline trade bodies over alleged predatory pricing, the e-commerce ace players Amazon and Flipkart have told the government that they suffer losses in Indian operations due to investments into building the business and technology, and not because they fund predatory pricing as alleged by offline trade lobbies, reported ET.
The e-commerce unicorns have given a clarification to the Department for promotion of Industry and Internal Trade (DPIIT) that they are investing big on creating warehouses and logistics network, technology and other such areas, while reiterating they are fully compliant with all laws and FDI norms for online marketplaces.
Amazon said it is making a profit at a transaction level in India.
“The marketplaces have said that all sellers have access to a live price dashboard where they can see each other’s price and then independently decide on discount, and they (marketplaces) have no role in either pricing or discounting,” an executive said.
Explaining their business model to the DPIIT, Flipkart and Amazon, collectively said that sellers have access to a nationwide consumer pool through ecommerce and can sell in volume by offering lower prices and yet make profit due to the large scale of operation.
“Sellers also source products directly from manufacturers whereby they have a higher margin than a single offline store,” another executive told ET.
A month earlier, the CAIT (Confederation of All India Traders) had alleged that both the marketplaces have burnt money in deep discounting during the festive season sales, violating FDI norms, impacting Diwali sales of offline retailers that slipped 40-50 per cent.
While, as per the Flipkart, a dominant majority of products sold are online-exclusive which are made available by sellers and brands, and not even available offline, hence the allegation of predatory discount further does not hold ground.
Amazon and Flipkart also said they are roping in thousands of smaller sellers and offline traders as a priority area, while working with micro, small and medium enterprises.
Flipkart further said that it has responded to DPIIT queries and is compliant with all laws.
Furthermore, Rajneesh Kumar, chief corporate affair officer at Flipkart, said that the sellers have a dashboard on which they have full control over their products and have access to offers on the marketplace.