Amazon is winning Indian consumers, but facing an unfriendly government
When Amazon’s Jeff Bezos announced his company’s foray into India two year ago, he was dressed for the occasion and posed with a brightly decorated truck, the likes of which are common on Indian roads.
It was a big moment, for Amazon had lost out in the Chinese market to local players like Alibaba and had to get India —the largely untapped, big consumer market— right.
And it has. The largest e-commerce player, Flipkart — a local version of Amazon founded in 2007 by two former Amazon employees — has rapidly seen its influence decrease as Amazon India, led by Amit Agarwal, has surged ahead. In just a matter of two years, Amazon is within striking distance for the top slot in India’s e-commerce market. Other local startups in the space, with lower resources in the highly competitive landscape, know that they have little chance of ever getting there.
So the hardwork and hiring smart people has paid off. But an unexpected new problem has cropped up: India’s thin-skinned foreign minister, who went after Amazon on Twitter to protest against a doormat sold by a third-party seller on Amazon Canada which had India’s flag printed on it. Sushma Swaraj, only the second woman to be appointed to the post in the nation’s history, viewed it as an insult to India and threatened to cancel visas of Amazon’s expat employees.
Think about that for a moment. This is one of India’s cabinet ministers, who publicly bullied Amazon, which is investing billions in India and creating hundreds of jobs, for a random doormat being sold in Canada. She has no idea that Amazon cannot possibly monitor every single item sold on the site. She did not seem to care for the message she is sending to foreign companies: that the nationalistic government can make life difficult for companies to do business in India, using trivial issues as an excuse.
But the right-wing supporters of the ruling party, who’re desperate to see India noticed by the developed world, got what they wanted. They saw the minister standing up to an American company and applauded her for it.
Amazon has a lot at stake in India. The retailer has already committed $5 billion towards growing its marketshare in Asia’s third-largest economy. India could become its second-largest market after the US if it continues its present growth path. With much of the country still not connected to the internet and e-commerce players fighting over an addressable market that’s only slowly expanding, Amazon is looking to be there for the long term. Swaraj leveraged this dependence through her Twitter tirade.
Many people saw her reaction as not just silly but unusual. Some of her cabinet colleagues ministers are high on jingoism, but Swaraj has been somewhat of an exception. With Prime Minister Narendra Modi handling many foreign visits and policy announcements personally, Swaraj as foreign minister has mostly been known for her Twitter outreach.
And she has used Twitter smartly, to reach people who need help and cutting out the bureaucracy, which otherwise makes it nearly impossible for the average person to directly contact a cabinet minister. She has kept a low profile, unlike some of her colleagues known to make provocative political statements, and has gained respect by using social media to help out Indians in distress abroad, including asking officials on Twitter to resolve visa or passport issues. She has over 7 million followers, and last year was on Foreign Policy magazine’s list of leading global thinkers for her Twitter diplomacy.
But her reaction wasn’t unusual if you really consider the party she belongs to, and her previous statements that portray her ultra-conservative beliefs. The best instance is that of 2004, when a coalition led by the Congress party won the general election and Sonia Gandhi, the Italy-born wife of former prime minister Rajiv Gandhi, was expected to become the next premier.
Swaraj, who had previously lost to Sonia Gandhi in a parliamentary election, came out with a over-the-top outburst, saying that she would ‘be like a widow’ by shaving her head and wear white, if Gandhi became the PM. Her opposition was rooted in Gandhi being a foreign-born, although the Indian Constitution, unlike America’s, allows foreign-born Indian citizens to become the prime minister. Looking at that past, Swaraj’s outburst against Amazon is not surprising.
The maker of doormats in Canada did not obviously want to insult Indians, who form a large diaspora in the country. It is common in the west to have national flags on apparel, and yes, doormats. It is not an insult, unlike in India where anything on which you stand on is seen as demeaned. Doormats on sale in North America and Europe have world maps on them, or pictures of artists and so on. There are shoes with presidential seals on them. People buy them because they like the design or are supporters of a particular artist or politician. Third party sellers of doormats with Indian flag will simply move on to other sites to sell them and find a ready audience. Swaraj’s outburst does nothing to resolve the problem.
All of that is lost on the ruling BJP’s core supporters, who have little regard for facts or nuances. They just want jingoistic babbling from their leaders from time to time, to feel good in a misguided belief that such utterances are making India more influential when reality is anything but that.
Amazon reacted swifly, and the doormats are no longer being sold on its Canadian website. But soon enough, slippers with Gandhi’s photo were found on Amazon. This time it was an aggressive bureaucrat who took issue, sending the message yet again that the government wants to impose its right-wing, ultra-nationalist views on foreign companies in India. That is a business-unfriendly approach, because there is no end to such issues. At a time when Modi is trying to improve India’s dismal ranking in ease of doing business, and attracting more startups, such bluster can only harm the country’s image.
Amazon, like Uber, has innovated specific processes for India, to rapidly expand while maintaining the reputation for quality service they’re known for worldwide. Their local rivals are now crying out for government support. Yes, you read that right. A bunch of startups, including Flipkart and Uber’s rival Ola, are now asking the nationalist government to make life easier for them. In other words, instead of striving for more innovation, they want tougher policies for US firms, who they copied, because they are being out-innovated and outperformed by them.
Seeing how Ms Swaraj behaved last week, I’m not betting against the government ignoring the obvious irony and actually going ahead with an ill-advised move like that. After all, this is the same government that just did a hash of demonetization. But I’m hoping that she goes back to being the efficient minister loved by average citizens who are up against a labyrinthine bureaucracy. They need her to listen to them and get their issues resolved. She should resist the temptation of joining the ranks of average populist politicians.
