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Private brands businesses of e-tailers under scanner

Oct 22, 2019, 11.06 AM IST
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Highlights

  • The DPIIT has sought several details, including total percentage of sales that come from private labels, their sourcing and categories in which these companies sell private labels
  • 'Express in terms of percentages if private label is more than in one category and also mention sellers of these private label products,' DPIIT asked online companies
(This story originally appeared in on Oct 22, 2019)
NEW DELHI: Private brands and digital payments businesses of online giants Amazon and Flipkart have come under the government scanner with the department for promotion of industry and internal trade (DPIIT) having asked the companies to submit various details about the same.

The DPIIT has sought several details, including total percentage of sales that come from private labels, their sourcing and categories in which these companies sell private labels. “Express in terms of percentages if private label is more than in one category and also mention sellers of these private label products,” DPIIT asked online companies.

For payment businesses, among other things, the government entity wanted to know whether Amazon and Flipkart run promotional schemes for users to use their digital instruments on own marketplaces and the proportion of total payments that take place from their prepaid payment instruments on own marketplaces. TOI has seen copies of the queries.

While Amazon Pay is the online payments processing service used by the US e-tailer that enables its users to pay with their Amazon accounts on even external websites, Walmart-backed Flipkart operates PhonePe, which was valued at around $7 billion by Morgan Stanley in September. Both compete with several players in the Indian market, including Google Pay and Ant Financial and SoftBank backed Paytm.

Similarly, private labels are present on both Amazon and the Flipkart and its group companies such as Myntra. For instance, sellers on Amazon sell household products under the Amazon Basics private label brand, while Flipkart-owned Myntra has private label fashion brands, including Roadster.

The government scrutiny comes against the backdrop of local trader groups such as Confederation of All India Traders (CAIT) repeatedly urging the government for intervention against alleged malpractices by Amazon and Walmartowned Flipkart, including deep discounting, predatory pricing and running exclusive partnerships with brands that are prohibited under existing FDI in e-commerce rules. Both companies, however, have denied the allegations and have maintained that they are in compliance with the FDI in ecommerce rules.

The DPIIT sought additional details such as whether factors like advertisements affect listing of products on online marketplaces and the percentage of sellers on these online marketplaces that avail the companies’ warehouse services. Emails iii sent to both Amazon and Flipkart did not elicit responses at the time of this edition going into print.
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