A sari seller from North East India, an artisan, a self-published author, a last-mile delivery executive and a stand-up comedian thank India for giving them opportunities in e-commerce giant Amazon’s recent digital ad campaign. “Today crores of people lead a successful life because of you,” the description under the ad reads, with the hashtag #WeThankYouIndia.
The advertisement was released in June this year, the same month the Indian government asked Amazon and rival Flipkart to ensure compliance with the new e-commerce regulations that came into effect in February. The government’s directive came in response to small traders across the country decrying the practices of the e-commerce giants, accusing them of creating an uneven playing field through deep discounting and predatory pricing.
With the We Thank You India campaign, Amazon sought to paint itself as a champion of small sellers instead by playing up the opportunity it opens up for those on its platform.
The true picture, however, is not quite so simple. Amazon, at the end of the day, is not measuring its success in social impact. The ultimate metrics for the company are the value of goods sold through its platform, or gross merchandise value (GMV), and, of course, the revenue it earns as a marketplace.
To this end, while the company undeniably opens huge markets up to sellers, Amazon has few qualms about competing with the small sellers its ads claim it champions. Indeed, one of the focal points of the seller protests, both in India and the US, has been Amazon’s use of purchase data to create private labels—Amazon-branded products that are sourced cheaply and sold at competitive prices. Over and above all this, a recent report by the Wall Street Journal alleges that Amazon tweaked its search algorithms to favour its preferred products and brands.
All of this has adversely impacted third-party sellers on its platform.
“After the private label brands were introduced in our sales category, our sales volumes have dropped drastically,” said one seller of imported electronics on Amazon. When the seller joined the platform in 2015, revenues through Amazon exceeded Rs 2 crore ($280,200) a month. Since AmazonBasics—Amazon’s global electronic accessories private label—entered the segment in 2016, revenues have plummeted. The seller now manages about Rs 60-70 lakh (~ $84,000-98,000) a month and fears revenues will continue to dwindle.
This practice isn’t unique to Amazon, of course. Flipkart, too, does the same. Both companies even entered the private labels business at the same time—2016. Amazon began with AmazonBasics, while Flipkart started with SmartBuy, which sells an assortment of products, including electronics and mobile accessories. The reach and pervasiveness of Amazon’s products in India, though, sets it apart from its Indian rival.