Amazon Reportedly Ripped Off Local Brands To Boost Sales

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Amazon.com (AMZN) is using its access to a vast number of buyers to promote its own products keeping the other sellers' products at stake in India, according to Reuters, who reviewed internal documents to reach the conclusion.

In a report published on Wednesday, Reuters said that it has access to thousands of documents including emails, strategy papers, and business plans, that show that the online retail giants are taking deceitful measures to promote in-house merchandise at the expense of other sellers. The documents stand testaments to how the company systematically used the search results to boost the sales of its products which are just cheap knockoffs of the original products in the sub-continent.

The report goes on to claim that the employees inflated the sales of the knockoffs to make sure that the search engine can be rigged to make sure that the Amazon products come on top of the list. In a 2016 strategy, the company also wanted the in-house products to be in the first 2/3 options on the list.
The report also showed how Amazon copied the measurements of shirts made by the brand John Miller to a tee and produced their knockoffs to win over the buyers. The documents also said that Amazon studied underlying information of each brand to find out the selling points or USPs of each performing brand so that they can knock it off. These products were called reference or "benchmarks".

Amazon created its own brand named Solimo, which used the metrics to get the best results. In the strategic approach, it was written, "use information from Amazon.in to develop products and then leverage the Amazon.in platform to market these products to our customers." Solimo has since then started business in the US s well.

In another document, "India Private Brands Program," Amazon employees actively partnered with the local brands to find out the unique processing which makes a telling difference in sales. The document read, "It is difficult to develop this expertise across products and hence, to ensure that we are able to fully match quality with our reference product, we decided to only partner with the manufacturers of our reference product."
The report also found out two executives, Diego Piacentini, former SVP, and Russell Grandinetti, Chief of international consumers, who made these clandestine practices formal.

Amazon has denied all the allegations against it and said, "As Reuters hasn't shared the documents or their provenance with us, we are unable to confirm the veracity or otherwise of the information and claims as stated. We believe these claims are factually incorrect and unsubstantiated."

To talk about the placement of in-house products on the top of searches, the company said, "We display search results based on relevance to the customer's search query, irrespective of whether such products have private brands offered by sellers or not."

The recent development has also caught the attention of European antitrust law enforcement as India is subject to receive support from Great Britain and the European Commission. These documents will also make life difficult for Amazon in the US as the arguments only strengthen the position of FTC chair Lina Khan. The recently appointed FTC head had published a paper in 2017 arguing that the big-box retailers use the information from small sellers and use it against them to boost their revenue.

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