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Amazon under fire

No company is above the law, but Wal-Mart's new acquisition is under Lore ...

tax dodging
The controversial retailer may have been violating Japan's business laws

For years sovereign states have scratched their heads over what to do about the rise of seemingly untouchable multi-nationals such as Amazon.com Inc (NASDAQ:AMZN).

For Japan, it looks like the head-scratching is over as officials from the country’s Fair trade Commission have reportedly raided Amazon’s office in Tokyo, investigating allegations that the online retailing behemoth has been using its clout to force sellers who use its Marketplace service to pitch their products at a lower price than are being offered by the same sellers for the same products on competing sites.

The Nikkei business daily reported the raid, and although a spokesman for Japan’s Fair Trade Commission declined to confirm the raid had taken place, the spokesman added: “I won’t say the contents are incorrect”.

Reports suggest that around 7.7% of Amazon.com’s net sales globally emanate from Japan, generating around US$8.3bn for the company.

Meanwhile, the latest attempt by supermarket giant Wal-Mart Stores Inc (NYSE:WMT) to fight back against its upstart online rival Amazon will cost the company a cool US$3.3bn, all but US$300mln of it in cash.

The company confirmed it has bought out e-commerce start-up Jet.com Inc in a cash plus shares deal.

Walmart said that Jet.com in its first year of operations had reached US$1bn run-rate gross merchandise value and 12mln stock keeping units, and is adding 400,000 new shoppers a month.

On average, it handled an average of 25,000 orders a day in its first year, both from direct sales and a network of 2,400 retailer and brand partners.

The company is clearly hoping that bringing Jet.com into the organisation will put some zip into its anaemic e-commerce annual growth rate, which stood at 7% in the last quarter.

Jet.com will continue to trade under its own name but there is speculation that the company’s chief executive and co-founder, Marc Lore, would be put in charge of all of Wal-Mart’s e-commerce operations.

Jet.com had previously indicated it would probably remain a loss-making operation until 2020.

“It will be interesting to see how and if that gets accelerated under Walmart and with the massively bigger economy of scale that this brings Jet.com. Indeed, that is something that Walmart is already highlighting,” said Ingrid Lunden, of the influential technology business site techcrunch.com.

Quick facts: Amazon.com, Inc.

Price: 2442.37 USD

NASDAQ:AMZN
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Market Cap: $1.22 trillion
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