Amazon pulls out private labels from India website as new e-commerce rules kick in

Amazon pulls out private labels from India website as new e-commerce rules kick in
Photo Credit: Photo Credit: Reuters
1 Feb, 2019

Amazon.com Inc.’s India unit removed all listings of its private brands across several categories as the government’s new foreign direct investment rules for e-commerce companies came into effect on Friday.

The private labels Amazon India pulled out from the local website include clothing brand Symbol, home and kitchen essentials and dry grocery brand Solimo as well as all Amazon Basics products such as bags and luggage. Listings from its largest seller Cloudtail India were also unavailable on the Amazon India platform.

Though unavailable earlier in the day, by noon on February 1, the stocks of Amazon’s in-house devices including smart speaker Echo and its variants and Fire TV stick made a comeback, being sold through multiple sellers such as Estore Mall, Hariom Communication LLP and others. 

"All Amazon devices are currently available on Amazon.in,” the company said in a statement. Private brands of the company continue to remain unavailable.

During its earnings call for the fourth quarter of 2018, the US-based online retailer remained tight-lipped on its India strategy in light of the February 1 deadline for compliance with foreign direct investment (FDI) in online retail. Brian Olsavsky, Amazon's chief financial officer, said that the company was still evaluating the impact of the ruling.

“There is much uncertainty as to what the impact of the government rule changes is going to have on the e-commerce sector but we are still evaluating it. We remain committed to complying with all laws and regulations and our main concern is to minimise the impact on customers and sellers. We have built our business around the best price selection and convenience. We don’t think the changes help the customers or the sellers in India," Olsavsky said during the earnings call. 

When asked about the investment in its India business, Olsavsky said that the company felt good about the long-term prospects in India. “The new regulations need to be interpreted and (we) need to ensure that it does not have unintended consequences,” he said.

The company reported 45% increase in revenues for the last quarter of 2018. Sales for Amazon Web Services increased to $7.43 billion from $5.11 billion a year ago. The net sales for the company grew by 19% to $72.38 billion.

Previously significant sellers on the platform had told TechCircle that the disruption of business will be temporary, as conveyed to them by Amazon India officials.   

Also, the DIPP issued a notification a day prior to February 1 saying that it will not extend the deadline after reviewing representation requesting the same.  

Both Flipkart and Amazon had written to the government requesting an extension of four to six months to comply with the ruling.

*The report has been updated with the latest status of products available on Amazon.in