Amazon's Rs 6,000-Crore Loss Smells Like Predatory Pricing, Says Piyush Goyal

Union Commerce Minister Piyush Goyal on Wednesday questioned Amazon's Rs 6,000-crore losses in India, hinting there were predatory pricing policies at the e-commerce platform. There was trickle-down impact of this on small retailers, he said.

"If you make Rs 6,000 crore loss in one year, does that not smell like predatory pricing to any of you?" Goyal said, referring to Amazon, during the launch of report on e-commerce and employment by Pahle India Foundation in New Delhi.

Further, Goyal questioned the nature of Amazon's investment. "When Amazon says it's going to invest a billion dollars in the country, we forget the underlying story that the billion dollars is not coming in for any great service or any great investment to support the Indian economy. They made a billion dollars loss in their balance sheet and they have to fill in that loss," he said.

Amazon is deploying loopholes to operate as a consumer e-commerce platform, despite not being legally allowed to do so, Goyal said.

"They're an e-commerce platform. They're not allowed to do B2C. The e-commerce platform, legally, cannot do business-to-consumer. They create entities where Indians contribute to making these entities, sadly. Then they get caught so they start closing those entities, that's part two of the story," he said.

"But they only re-route all the business through an entity to show that it is B2B, but reality is all of you buy on these platforms. How do you buy? B2C is not allowed, how are they doing it? Should this not be a matter of concern for all of us?"

Amazon declined to comment.

Goyal further questioned Amazon's practices in India. "How did that loss get caused? They paid a Rs 1,000 crore to professionals. I don't know who these professionals are...I want to know what kind of lawyers and CAs get Rs 1,000 crore, unless you're paying all the top lawyers to block them, so nobody can fight a case against you," he said.

The growth of e-commerce can cause "huge social disruption" to retailers and shopowners of the country, the minister added.

Growth comes out to be 27% annually, he said citing the report. "We look at it as a source of pride. Lots of youngsters, including my children, order online. But we must remember that what we’re doing today is going to determine the future of India 10 years down the line."

E-commerce doesn’t attack every part of the retail store. Every store has only 5-10% items that make a good profit for the storeowner, Goyal said. "E-commerce is edging and wedging into high margin products, imagine what happens to the over 10 million retail stores in our cities."

"I don’t see it as a matter of pride that half our market could possibly become a part of the e-commerce network 10 years down the line. It’s a matter of concern," the minister said.

“There are three kinds of lies: lies, damned lies, and statistics."

Goyal added that the largest impact of e-commerce is currently being seen on pharmacies and mobile phone repair shops. He also said the impact of cloud kitchens on the food and beverage industry should also be looked into.

"We'll end up becoming a country of couch potatoes, watching OTT and ordering food at home everyday from Swiggy and Zomato. Going out is also important."