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Retailers oppose Amazon’s gift vouchers

By Sujata Sachdeva

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A smart marketing gimmick by Jeff Bezos, Amazon’s founder and CEO, has riled Indian brick-and-mortar retailers. Earlier this month, Bezos sent out email offers of Rs 200 gift cards to millions of Indian customers. The email talked about the company’s successful journey in India and lauded the Indian customers for making Amazon.in the most visited e-commerce site in India. The email was signed by Bezos himself and it contained data by comScore which showed the site rapidly moving ahead of other e-commerce websites.

A complaint has been made to the government by the Retail Association of India which has said that Amazon has violated the foreign direct investment (FDI) laws. As per the FDI laws, India allows foreign investment only in business-to-business operations (B2B), and not in business-to-customer (B2C) set up. Lately, Indian retailers have been protesting against the rapidly growing e-commerce business in the country.

However, the e-tailers contest these claims. They argue that they operate on a marketplace model where 100 per cent FDI is allowed. Moreover, they only offer platforms for Indian retailers to trade. Bezos in his email said that Amazon had ‘built a vibrant marketplace with tens of thousands of sellers offering everyday low prices on India’s largest selection of over 30 million products’. He is confident of continuing with the investments.

But Indian retailers are not convinced. They believe that offering a gift voucher of Rs 200 is equivalent to retail, and that the marketplace is a sham model for sales adopted by foreign online retailers.

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