Third-party sellers flag Amazon's data policy, say company pushing in-house brands

BENGALURU: A group of Indian third-party sellers and seller associations has demanded better transparency from Amazon on its data practices and preferential treatment for in-house brands, especially at a time when they are increasingly more dependent on online channels for sales. Five small sellers across categories like fashion, toys, packaged foods and general merchandise, told ET they have highlighted these concerns to Amazon India, but there has been no clear response on the issue.
The development comes in the backdrop of Amazon founder Jeff Bezos’s admission to the US Congress on Wednesday that he can't guarantee that the ecommerce giant isn't accessing third-party seller data to develop its own competing products. These allegations had been previously been denied by the company and its executives.

Amazon has more than five lakh third- party Indian sellers. The online retailer operates at least eight private label brands here including home cleaning products range under Presto!, fashion brands - Symbol, Myx, House & Shields and Arthur Harvey; as well as small furniture and appliances under Solimo, grocery label Vedaka, apart from its popular AmazonBasics brand for small electronics.

Sellers say their issues revolve around differential platform fees, and the use of sales data to make Amazon private labels and partner brands stronger, which have also been highlighted by local seller bodies in the past.

“Online is now the platform for survival as people are not buying much through offline retail. These practices have been a concern for a larger set of merchants, as there are no clear checks and balances,” said a small merchant who sells toys on Amazon, with an average sale of less than Rs 3 crore. Amazon’s reassurance around these issues have so far only been through their affiliate partners like Bridge2Busines, CPC Business verbally. “If you are not spending atleast Rs 20,000 per month on Amazon services, sales channels just don’t open up, and even after that investment, you compete with Amazon’s own products on price,” said a seller on the platform.


“Using competitors’ data to design private labels and selling it at massive discounts and discounted platform fee to preferred sellers are the issues flagged in India,” said Chanakya Basa, managing partner at Knock Legal, the firm which has represented The All India Online Vendors Association (AIOVA) in a few cases against platforms. AIOVA is a lobby group for 3,500 online merchants which said, “Reforms are the need of the hour in our industry, and we can’t keep depending on self-regulation,” said an AIOVA spokesperson.

Amazon did not reply to ET's email seeking comments on the story.

"We have a policy against using seller specific data to aid our private label business but I can't guarantee to you that that policy hasn't been violated," Bezos said on Wednesday under oath while answering a question posed by Rep. Pramila Jayapal during the Congressional hearing.

“The only way to survive is that either your brand is so powerful that the platform cannot replace you or they will copy your product and keep you.The real issue is when a third-party brand is not powerful, that's when they will copy and replace,” he said. Amazon's lack of platform neutrality has raised anti-competitive concerns globally. Third-party sellers have previously pointed to being undercut by Amazon in India as well.

An Amazon employee ET spoke to on the condition of anonymity highlighted several practices of the company that may come under the scanner for antitrust. “It’s not just about launching a private brand using our platform data. The problem is other benefits like lower ads cost, cash back schemes, appearing on top searches, priority display on Amazon filters,” he said, requesting anonymity.

Lawyers that ET spoke to highlighted that if proved in court of law, this could be damaging for Amazon. "Typically most independent sellers would have signed a confidentiality clause with Amazon where both parties would be bound to protect the confidential information of both parties. The action of Amazon could be a violation under that contract," said Goda Raghavan, Partner, AK Law Chambers.

Amazon and its rival Flipkart have been under the government scanner for the last few years on allegations of business malpractices including discounting practices, exclusive brand launches and preferential treatment of sellers. In January, the Competition Commission of India (CCI) released the findings of a market study that it had conducted where it cited a lack of transparency in the functioning of marketplaces. It then suggested self-regulation by ecommerce marketplaces.