Amazon and Flipkart explain business models to govt: Reports

Amazon and Flipkart have reportedly explained to the government that they incur losses in their Indian operations due to investments into developing the business, rather than on predatory discounting as alleged by CAIT. The e-commerce giants cited making “big” investments in creating warehousing and logistics networks. They denied having any say in the pricing or discounts on the seller listings.

The online marketplaces said they incur losses in Indian operations due to investments into building the business and technology, and not because they fund predatory pricing.

Flipkart and Amazon had, in fact, claimed that because of their large scale of operation, sellers could sell in volume by offering lower prices and yet could make a profit.

Reacting to allegations by CAIT that online marketplaces had burnt money in deep discounting during the festive season sales and violated FDI norms, DPIIT had earlier sent a set of detailed queries to online marketplaces. CAIT also said that Diwali sales of offline retailers slipped 40-50%.