Zodiac Wealth, a company owned by Amazon India and its joint venture partner Patni Group, has decided to exclude Appario Retail from selling on the online platform. According to sources, the decision was made to eliminate any possibility of a conflict of interest.
Appario is a subsidiary of Frontizo, which in turn is a joint venture between Amazon India and Zodiac Wealth Management, owned by the Patni Group.
According to the statement, Amazon and Zodiac have agreed to update their joint venture, Frontizo. The two partners have decided to remove Appario from Amazon's platform within the next 12 months.
“The partners will continue to explore new business opportunities, to scale up their online presence,”
an Amazon spokesperson in India said in a statement.
Last year, Amazon ended ties for another large seller (Cloudtail) following allegations from retailers that some sellers received preferential treatment.
A Reuters investigation based on Amazon documents last year found that for years the company had given preferential treatment to a small group of sellers, including Cloudtail, and used them to bypass Indian laws.
The investigation found that about 35 of Amazon's more than 400,000 sellers in India in 2019 accounted for around 2/3 of sales on its India website. Of that figure, two sellers, Cloudtail and Appario, contributed 35% of the platform's sales.
In April 2022, the Competition Commission of India raided the offices of Appario and Cloudtail after the companies were accused of violating the Competition Act.
As noted by TechCrunch, long-standing laws in India restrict Amazon and other e-commerce firms from holding inventory or selling items directly to consumers. To bypass this, firms have operated through a maze of joint ventures with local companies that operate as inventory-holding firms.
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In 2020, members of the Confederation of All India Traders (CAIT) had approached the CCI alleging abuse of market dominance and competition law violation by Amazon.
The petition alleged the platform promoted only preferred vendors on its platform, which impacted non-preferred sellers.
It was also alleged that Amazon owned stakes in some online vendors on its platform, which was also not allowed under the foreign investment rules for ecommerce.
The current foreign investment policy provides that ecommerce entities providing a marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain a level playing field.
Source: ibc24.in
