After raising their voice against the Walmart-Flipkart deal and delayed payments from Flipkart, online sellers have now raised a new issue against Flipkart’s rival Amazon.
A section of sellers has made a complaint that Amazon seems to be favoring a particular seller Cloudtail India over others. They plan to take up the issue with the Competition Commission of India. The details of the results of Cloudtail for the last year have provided the ammunition to these sellers. Cloudtail incidentally is a joint venture between Amazon and Catamaran Ventures, the family office investment arm of Infosys co-founder N.R. Narayana Murthy.
Some of the statistics put out may be a little confusing and may not exactly point to the allegations being made. Consider this: Cloudtail registered a 300% growth in business in the year 2015-16 while it was just a meagre 24% this year (2016-17). It has also been pointed out that Amazon had recruited some 11 new top sellers on its site to counter the dependence on Cloudtail.
But the figures being highlighted by those making the complaint relate to the cost of sales as reported by Cloudtail in its annual report. It says incurs only 5% while the traders claim the average cost is around 20%. Apart from Cloudtail, another seller being singled out for receiving extra favors from Amazon is Appario. This is another seller where Amazon has an involvement being a joint investor along with the Patni Group.
The other financial figure quoted by the sellers on Amazon relates to the delivery charges paid by Amazon Seller Services, in the same year, which was Rs 2549 crore, an increase of 69% from the previous year. The charges collected by Amazon form the sellers on its platform include, commission, logistics, storage fee, fixed fee, pick and pack fee, return charges and penalty.
Amazon has stuck to its position that it does not show any kind of favoritism to any of the sellers and treats all sellers on its platform as equal as a matter of policy. There is also the regulation under FDI, that no single seller can account for more than 25% of the overall sales on any online ecommerce platform.
But Amazon has a platinum seller program under which it offers better terms to the sellers and this is pointed out as some form of discrimination as well. However, that program itself has since been suspended following the introduction of GST. Amazon’s own figures indicate a robust growth while the losses are also increasing.