Govt Sends Questionnaire To Flipkart, Amazon Alleging Deep Discounts

E-commerce majors Amazon India and Flipkart have been asked to reveal the top sellers on their platforms through a detailed questionnaire sent to it by the government.

The Department for Promotion of Industry and Internal Trade (DPIIT) in separate questionnaires to these companies asked them to share their capital structure, business model and inventory management system. They have also been asked to share details about the association with payment gateways.

The development comes after Commerce Minister Piyush Goyal suggested an investigation on e-commerce companies to check any violation of norms. He said: “E-commerce firms have no right to discount products and use predatory pricing to dominate retail sales.”

E-commerce companies announce discounts in limited-period sales to boost sales during the festival season.

Predatory Pricing In E-Commerce Industry?

“Amazon has a high bar for compliance and we continue to comply with all applicable laws of the land. Amazon.in is a third-party marketplace where sellers offer their products to customers for sale,” an Amazon India spokesperson said.

“Sellers on amazon.in have the absolute discretion to decide what products to sell and at their prices. Amazon cannot and does not participate in seller’s decision related to their products and its prices,” the spokesperson added.

Last week, Flipkart had said it was compliant with all applicable laws after the Commerce Minister’s comments pointed at a probe into alleged predatory pricing in the e-commerce space.

As per the current FDI policy, the government allows 100 per cent FDI in the marketplace model of e-commerce but not in the inventory-based model. The online firms are also not allowed to directly or indirectly influence prices of goods to be sold on their platforms.

Both Amazon and Flipkart have maintained that they follow the current FDI policy. The companies also strongly deny any involvement in deep discounting, saying brands offer those discounts.

Record Transactions On Platforms

In just five days of the “Great Indian Festival” sale, Amazon received orders from 99.4 per cent pin codes in the country. Similarly, Flipkart said that during its six-day “Big Billion Days” sale, it registered a 50 per cent increase in the number of new customers compared with the last year.

According to market research firm Forrester, online retailers in India are expected to generate as much as $4.8 billion in sales from September 25 to October 29. According to consulting firm RedSeer, e-commerce companies such as Flipkart and Amazon could possibly generate up to $6 billion or Rs 39,000 crore in sales this festive season.

The affordable internet and smartphones make India a potential and attractive market for companies such as Flipkart and Amazon, according to analysts.

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