Amazon move to withdraw 27 pvt labels in US a boon for govt’s plan

NEW DELHI: Amazon‘s move to withdraw 27 of its 30 private labels in the US couldn’t have come at a worse time for the e-commerce giant and provides further ground for Indian authorities to crack down on marketplaces that have been using the tool.

In India, the government, which is almost ready with the new consumer protection rules and e-commerce policy, is looking at ways to ensure that there is no circumvention of rules that let e-tailers follow an inventory model instead of being a marketplace or a platform where third-party sellers hawk their products to consumers.
“The policy draft is almost done barring some more consultations between ministries,” said an official, following discussions with several industry players last week. Following the meeting, TOI had reported that the new rules provide for checks on private labels sold by related parties or entities, where players such as Amazon and Flipkart or even Indian e-commerce players have an interest. Over the years, e-commerce players have launched a series of private labels – from pulses to pullovers and kitchenware – in India, just like their counterparts who operate through brick-and-mortar stores.

But unlike others, who have physical retail outlets, the online marketplaces have foreign direct investment, which is not allowed in the multi-brand retail segment. “The current operating model is a circumvention of the FDI rules, which we are seeking to stop and ensure everything is in line with the legal provisions and that consumer interest is fully protected,” said a government official.
On their part, both Amazon and Flipkart (where Walmart is the largest shareholder) maintained that they have complied with the relevant rules.
The decision in the US – which Amazon said was taken as some of the products were not resonating with customers – is seen to be the result of antitrust action against the company, which had denied any wrongdoing in the past. In the US, too, Amazon has faced a range of allegations – from use of third-party data, to giving preference to its own products at the expense of other sellers and use of its own delivery services.