To ensure fair competition in e-retail, keep a close eye on Amazon

A Reuters report on how Amazon has been going about its business in India has raised several questions on whether the e-commerce giant has truly created a level-playing field for the online sellers that use its platform.

Given that this is not the first occasion when concerns have been expressed about whether Amazon is only being selectively beneficial despite the firm’s stated commitment to empower all small businesses that bank on its e-marketplace to reach out to customers, it is time that authorities undertake a comprehensive, time-bound investigation into the issue.

A probe of this kind conducted by a special task force — that should include experts drawn from the retail and technology segments, among others — could go a long way in ensuring fair competition in India’s e-retail arena. It would also send out a clear message to Amazon that, however, big a company it may be, and for whatever it may have said about making additional investments in India, the firm should not expect to take 1.3 billion people (~17 percent of the world’s population) for granted.

Of particular scrutiny should be the Seattle-based company’s contractual arrangements with its bigger selling partners in India and how the terms specified in such pacts compare with what Amazon has with its other selling partners. If it transpires that the contractual terms with different parties are heavily disproportionate in terms of the benefits offered by Amazon, the company will have a lot to explain, including as to why some are more equal than others.

All the entities with which Amazon currently has, or in the past has had, significant business relationships in India should also be thoroughly examined as part of this investigation. These local enterprises could provide vital insights on how Amazon runs its India operations, including the way the e-commerce company goes about implementing its suspension policies.

Amazon itself should have no objections to such an inquiry being conducted as being found to be doing nothing wrong could go a long way in strengthening its own brand equity in India, and bolster greater goodwill for the company among the small businesses it aims to on board its platform. On the other hand, going on the defensive would make one wonder the reasons why Amazon is not in favour of a probe. Especially, when, while announcing its financial results for the fourth quarter ended December 31, Amazon had said that thousands of online sellers had benefitted from its ‘Small Business Day’ event held that month.

Such an investigation will not put India or its business environment in bad light. On the contrary it will send out a message to those who feel that they can exploit the e-market in India by bleeding local businesses. For investors who are in for the long run and want to positively contribute to India’s growth, such an investigation will be a confirmation that the system is transparent and beneficial for all.

Investigations apart, now might be a good time to also check whether or not small business are actually benefitting from the existing e-marketplace model. For a vast and diverse country like India, where business models and approaches are equally diverse, can e-platforms and their cookie-cutter approach be enforced to the benefit of the small trader? Predominantly in such approaches the welfare of the small businesses are not factored in. One is positive that if there are a sizeable number of dissatisfied sellers, e-platforms such as Amazon will be willing to address their concerns.

To its credit, Amazon has significantly contributed to the development of India’s online retail sector. But for a country such as ours with a rich entrepreneurial culture, it may probably be in the fitness of things that going forward the e-retail segment does not lose its richness of variety and become subservient to a process that might not only be discriminatory but also destructive.

Sumali Moitra is a current affairs commentator. Twitter: @sumalimoitra. Views are personal.