Amazon's huge loses in India "smells of predatory pricing" or something else? \ stacker news ~econ

Amazon's huge loses in India "smells of predatory pricing" or something else?

954 sats \ 17 comments \ @Coinsreporter 21 Aug econ

It was just a year ago when Amazon CEO had a very productive talks with PM Modi in USA and said that Amazon had already invested 11 Billion in India and intend to invest another 15 Billion in coming years and "are looking forward to partnering with India.

However, the Commerce and Industry Minister Piyush Goyal on Wednesday questioned Amazon's recent announcement of USD 1 billion investment in India, saying the US retailer was not doing any great service to the Indian economy but filling up for the losses it had suffered in the country.

He also said that their huge losses in India "smells of predatory pricing", which is not good for the country as it impacts millions of mom and pop stores.

"When Amazon says that we are going to invest a billion dollars in the country, we celebrate, and we forget that the billion dollars are not coming in for great service or investment to support the Indian economy. They made a billion-dollar loss in their balance sheet that year, they had to fill in that loss. And how did that loss get caused, they paid Rs 1,000 crores ( to professionals. I do not know who these professionals are...I would love to know, which chartered accountants, professionals or lawyers get Rs 1,000 crores (1 Billion USD) unless you are paying all the top lawyers to block them so that nobody can fight a case against you," the minister said.

He wondered whether the Rs 6,000 crore (6 Billion USD) loss in one year does not smell of predatory pricing, as they are just an e-commerce platform and those companies are not allowed to do B2C (business to consumer) business.

As per the policy, the e-commerce platform legally can not do B2C in India.

So, these Online retailers like Amazon only re-route all the businesses through an entity to show that it is B2B.

In short, They are actually doing it with illegal practices here in India.

The Real Picture:

Amazon has clearly crossed some lines here by not adhering to its announcement made in January for donating $1 Billion as peace offering for small retailers and MSMEs which is the real tooth of contention here. Apart from this Amazon has been happily doing business in India and will be doing it. They just need to adhere to their promises if done to the Government.

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21 sats \ 5 replies \ @Undisciplined 21 Aug

None of the many alleged instances of predatory pricing throughout American history actually withstand any scrutiny. Sure, there are many cases of a big business radically lowering prices and driving competitors out of business. The part that never happens, though, is where they jack the price up afterwards.

77 sats \ 4 replies \ @Coinsreporter OP 21 Aug

They jack the prices as they get full control over market, when they have fully imposed their monopoly, when people can't help buying from them, when they feel, there's no competition visible.

32 sats \ 3 replies \ @Undisciplined 21 Aug

I'm aware of the concept. What I'm saying is that when economic historians have investigated instances of supposed predatory pricing in America, it never actually happened. Prices went down, but were not raised later.

Maybe it has happened elsewhere. I'm not familiar with any scholarship on that. It would be more likely in a heavily regulated place like India, because there are many barriers to (re)entry.

78 sats \ 1 reply \ @Coinsreporter OP 22 Aug

I'm sorry! I wasn't trying to tell you the concept, just wanted to extend what I understood from your comment. My bad! I took it the other way.

Prices went down, but were not raised later.

It may be the effect of less middleman between manufacturing and buyers. It's also happening in India. The thing that we buy online through Amazon or Flipkart cost us lesser than off line stores. It's going on for years now. The prices actually never rose here as well.

TBH, I don't think that online retailers are bad for economy in the long run. The small shops of 'Baniyas' in India are scattered like a net of swindlers and above them there are middlemen who have their share in profits.

Online retailers are better for consumers! Also good for creating jobs.

10 sats \ 0 replies \ @Undisciplined 22 Aug

No worries.

When Walmart was rapidly expanding, there were a lot of similar complaints here. I'm sympathetic to people who don't like these changes, but the point of consumer sovereignty is that we get to support who we want. It's up to those small businesses to make it worthwhile to their customers, not the other way around.

0 sats \ 0 replies \ @IamSINGLE 22 Aug

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38 sats \ 0 replies \ @TheMorningStar 21 Aug

I think Amazon is doing ahat it's doen elsewhere, trying to create monopoly which India won't allow. So, Amazon you aren't doing good business here.

51 sats \ 1 reply \ @BitcoinAbhi 21 Aug

No matter what people think, IMO, that small businesses are suffering a lot from Amazon and in the future the customer will also suffer a huge loss.

79 sats \ 0 replies \ @Athena 21 Aug

I agree with you. Many small businesses are on the verge of closure. First because of the mall and now because of Amazon.

41 sats \ 3 replies \ @Golu 21 Aug

Amazon's just shilling its deep pockets into India. It can't compete with local Flipkart, not in future, never. And it's all because, the government won't support outside companies that much as they do for Indian.

32 sats \ 1 reply \ @xz 21 Aug

Flipkart

it's a shame some of these other resellers like Flipkart, or Jumia in Africa don't seem to get a foothold into international markets. I really hate living in a world of duopolies, like that of amazon and aliexpress.

0 sats \ 0 replies \ @Coinsreporter OP 21 Aug

You're right brother. They can't get foothold because Amazon has the money monopoly on some of the biggest markets. Can we imagine that an African or an Indian company survive doing business in USA?

0 sats \ 0 replies \ @Coinsreporter OP 21 Aug

It's true! If Amazon keep on shilling their purse, thy may keep on doing business.

11 sats \ 1 reply \ @SatsMate 22 Aug

In places like India where there is a robust free market and many nice mom and pop shops, I think Amazon will be a rent seeking corporatocracy that will hollow out a lot of the free market commerce. I honestly don't think Amazon will serve India well from my limited view...

24 sats \ 0 replies \ @IamSINGLE 22 Aug

It will only serve better if it never reaches to a monopoly state. With Flipkart and other local business going very strong here, I don't see Amazon to make any inroads for monopoly

0 sats \ 0 replies \ @mdominicorobin24 22 Aug

A very lucrative deal between a tech giant and a politician that does not season well. It is a very sour proposition to begin with but too poisonous moving forward.

0 sats \ 0 replies \ @Satoshi__Nakamoto 21 Aug

This could nt