E-commerce major Amazon.com Inc.’s India arm has been in the news after allegations of preferential treatment to two of its sellers and circumventing foreign direct investment (FDI) laws resurfaced. Amazon and rival Walmart-owned Flipkart are also being investigated by regulators for alleged anti-competitive practices and predatory pricing, among other charges. Amazon has committed around $6.5 billion to its India business. In an interview, Amazon’s global senior vice-president and India head Amit Agarwal spoke about the allegations, its large seller base and long-term strategy. Edited excerpts:
With allegations of circumventing FDI norms resurfacing and investigations by authorities, how challenging has it been for Amazon on the regulatory front?
Every country has its unique laws, and our job is to comply with the laws of the land. It is true that any service that is loved by customers and is innovating and transforming at the rate Amazon is should be inspected. I have no issue in being inspected and asked questions and we have been open and transparent to anything asked of us. We don’t see regulations as a challenge. We see key regulations as the law of the land, and the need to operate within those, and yet figure out how we can serve customers well.
In India, the laws require us to operate as a marketplace and have been focused on using technology to empower sellers and for digital inclusion of consumers. It forced us to innovate and introduce various India-first solutions, in ways that we never did before. We launched Amazon Pay for customers, invested in local languages, both for sellers and consumers, helped customers use video and voice for shopping. Of course, every business would say that they would love a country that had the maximum ease and flexibility of doing business. But such a country doesn’t exist.
How do you react to allegations of seller bias and preferential treatment to some large sellers?
I want to categorically say we have always been compliant with all Indian laws, including FDI laws and Press Notes. The documents referred to in the recent media articles have not been shared with us and we cannot confirm the veracity or otherwise. All the information in the stories is factually incorrect and unsubstantiated. There is a deliberate, organized effort by vested interests to create sensation and discredit Amazon.
They defy common sense because they interpret past action and regulations in the current context of regulations. They ignore the fact that regulations in India have changed multiple times in the last seven years that we have been around. They are wrongly inferring wrongdoing from what was legitimately permitted in the past.
For example, in March 2016, Press Note 3 introduced a requirement that a marketplace cannot allow any single seller to account for more than 25%. We had then said we are complying with the change and had taken specific actions to stay compliant. These articles are conflating discussions prior to the event with present policies, which is not only mischievous, misleading, motivated but completely out of context. We have always been open and transparent about our partnerships.
How would you describe Amazon India’s seller ecosystem?
We are a marketplace, and like any mall, we have all kinds of sellers—large and small, as well as anchor sellers who bring in traffic. Today, we have over 7 lakh sellers. There are franchises that are run like cooperatives that bring in more than 1 million artisans. We launched Local Shops on Amazon in 2020 in response to covid, which allows neighbourhood stores to come on the platform and enables digital presence. There are 40,000-50,000 such stores. Finally, there are stores that act as logistics partners and pick-up points and we have 50,000 of them. In total, we have more than a million SMBs (small and medium businesses) who are part of our ecosystem. On the digital empowerment side, we also launched Seller Flex that allows sellers to convert their physical locations into fulfillment centres.
The focus is also not just to sell nationally but also through our Global Selling Programme allow them to sell globally. We have over 70,000 SMBs now selling globally and global exports have crossed $2 billion through Amazon already. Just last year, we had more than 1.5 lakh sellers join Amazon and more than 50,000 of them came through Tamil and Hindi languages.
So, how does Amazon define large and small sellers?
We don’t have any definition of large and small but what I would direct you to is our transparent programme called Amazon STEP. It indicates the seller tiers (slabs) and the benefits they can earn based on their performance. All sellers have a fair chance of getting access to these tiered benefits, including better fees, rewards. We don’t want their size to be an entitlement, but we want sellers to earn their size through serving customers well. When Amazon started, we were an SMB, so we realize that startups today can become massive companies tomorrow.
We have created technology solutions where sellers can present their products before customers. The marketplace has a mix of all kinds of sellers. Our 7 lakh plus seller base consists of all kinds of sellers, including big brands like Croma, Vishal Megamart, Sangeetha Mobiles, medium-sized and emerging brands like Vahdam tea, Wow, Two Brothers organic farms, Urban Platter, to NGOs, micro-entrepreneurs, weavers and artisans.
What about Cloudtail and Appario Retail, who have been constantly named as Amazon’s preferred and largest sellers?
They are like any other seller in the marketplace. There is no law that prevents them from selling online and their presence in the Amazon marketplace is in complete compliance with every FDI law and Press Note.
What are your expectations from Andy Jassy, who has been named the next CEO?
Amazon’s fundamental mission of wanting to be the world’s most customer-centric company, culture, leadership principles are so ingrained in our organization that it gives us a great playbook. All our leaders are focused on obsessing with customers, inventing on their behalf and that has been hardened over many years. Jeff (Bezos) has played a huge role in doing that and you should expect the same. You should expect India to be a continued priority for Amazon, as we witness a massive digital transformation in the country, focused digital empowerment and inclusion. Amazon will play a big part as a catalyst to drive that. You should expect us to continue to invest in India, to be committed long-term and work side by side with the government.
Our customer priorities are aligned with India’s priorities because the success of our marketplace is centred around digital transformation, building technology and infrastructure to enable it, which is also the vision for Digital India.
Will Amazon expand its manufacturing line beyond Fire TV stick devices in India?
Amazon has pledged to invest $1 billion to digitize 10 million SMBs, help Indian businesses sell worldwide, enabling $10 billion in cumulative exports, and create an additional 1 million jobs by 2025. The more India digitizes, the stronger manufacturing becomes, and more people would use Amazon for shopping, content and in their daily lives. Manufacturing Fire TV stick locally in India, hopefully, is just the first step in that direction.
We had also launched the Accelerator programme that provides insights to manufacturers in India. We have thousands of them who use Amazon to launch their products and many of them are also launching globally. That’s a focused programme in manufacturing along with our own manufacturing line now.
What are the growth frontiers for Amazon in 2021?
We recently announced combining and converging our grocery category into a single offering. Customers love Fresh and Pantry and we decided to merge them into a single grocery store. We have already started rolling it out. We also started testing Amazon Pharmacy that would allow customers to buy prescription medicine. We will continue to add selections and products, which means adding sellers. We will also invest in infrastructure so that sellers can ship products to customers fast. –Livemint