Amazon Seeks Stable E-commerce Policy

Amazon said it is hopeful of working with the Indian government to seek a “stable predictable policy” that would facilitate the company to continue with its investments in technology and infrastructure. The comments come almost six months after the revised norms on foreign direct investment in e-commerce came into effect. These bar e-commerce firms with foreign investment like Flipkart and Amazon from selling products of entities in which they hold stake or whose inventory they control.

It also disallowed them from asking a seller to sell any product exclusively on their platforms. The rules said e-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods and services.
Currently, the government is in the process of formulating an e-commerce policy that proposes regulating cross-border data flows, setting up storage facilities locally and establishing a data authority to devise a framework for sharing data.

“On the government side, our engagement with the Indian government makes us optimistic about partnering and collaborating to seek a stable predicable policy that allow us to continue investing in our technology and infrastructure. And it also helps us to create jobs and scale local businesses,” Brian Olsavsky, chief financial officer at Amazon, said in Q2 2019 earnings call.

Amazon and Walmart-backed Flipkart together command close to 80% market share in the e-commerce sector, analysts said. Reportedly, Amazon has reduced its stake in key supplier entities Cloudtail and Appario so that they cease to be group companies of Amazon and can resume sale on its marketplace.

“There is a lack of clarity in the (FDI) policy in relation to private label goods and the kind of services covered. Also, there are no set guidelines as to what would be treated as predatory pricing and discounting. These are some of the clarifications companies may be seeking,” Atul Pandey, partner at Khaitan & Co, had said earlier.

In the three months ended June 2019, Amazon’s net sales increased 20% to $63.4 billion compared with $52.9 billion in second quarter 2018. Excluding the $814 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 21% compared with second quarter 2018, the company said.

Amazon also said the number of paid Prime members in India has doubled in the last 18 months. According to estimates released by market research firm RedSeer Consulting for the current month, Amazon has about 10 million Prime members in the country of the total 120 million online annual e-tail shoppers.

While 40% (of the 10 million members) have directly subscribed to the Prime membership, the rest of the users have received Prime membership through bundled offers with telcos, analysts at RedSeer said. About 30% of the members subscribe to Amazon Prime to access videos, the analysts added. Analysts, however, said the actual paid Prime membership numbers may be higher than the estimated figures.―Financial Express

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