Amazon.com Inc has come out with a strong statement on the new FDI rules in India, stating that the policy will affect price selection and convenience for customers and sellers, in one of the first significant comments from the e-commerce giant. The statement came even as Amazon India brought swift changes to its platform overnight on Thursday to comply under the new rules, with its seller entities Cloudtail and Appario virtually disappearing from the platform, and several of its private label products also missing.

The impact of the rules was a concern raised by multiple analysts during the Q4 earnings call on Thursday, just a day ahead of the FDI rules coming into effect, marking a significant impact on Amazon's business structures in India, especially its control on inventory and pricing.

The Indian government has not given Amazon and Walmart-owned FLipkart anyway leeway in complying with the new e-commerce policy, reiterating on Thursday that there will be no extension of the February deadline.

"There is much uncertainty on the impact of government rule changes on ecommerce," CFO Brian Olsavsky said on the call. "We remain committed to complying to the rules, but we are evaluating the situation. The main concern is trying to minimize impact on consumers and sellers."

"We built the business around price selection and convenience, the changes don't help in those dimensions for both sellers or customers," Olsavsky said.

Asked whether the new policy will change the attractiveness of the Indian market for Amazon, the company reiterated the impact but said it continued to have long-term prospects.

"We are still evaluating. We feel good about the long term prospect in India. The new regulations need to be interpreted to ensure they have unintended consequences. It is not consistent with better price , better selection," the company CFO said.

The new rules impact how e-commerce companies with FDI funding control inventory, disallows seller entities in which these companies have equity stake and also restricts how much vendors selling on the marketplace can source from the wholesale business of the e-commerce company

India's significance for Amazon's international business was highlighted during the earnings call last quarter, when Amazon said international sales slowed in the September quarter on account of Diwali falling later in the year in India than in 2017,

In the December quarter, Amazon's international business, driven mainly by India, had seen a growth in sales of about 15% to $20.8 billion, suggesting slowing international growth for the e-commerce behemoth. Amazon had seen international sales grow by 30% in the same quarter in 2017.

However, Amazon is starting to rein in international losses which stood at $642 million in Q4, lower than the $919 million record the same quarter last year.

Overall, Amazon saw sales hit $72.4 billion in the December quarter, with full year sales reaching $232.9 billion, compared with $177.9 billion in 2017.

First Published:Feb 1, 2019 7:04 AM IST