“In light of the foregoing, Cloudtail is offering to sell/liquidate its existing/residual inventory, including products purchased from you. Please also treat this communication as formal notice of termination of the agreement,” it said recently. Ranjit Babu, Managing Director and Managing Director of Cloudtail. writes to the sellers and assures the suppliers to honor all orders issued by it until April 18, 2022.
ET has seen the emails received by several sellers.
Emails seeking comment sent to Amazon India and Prione Business Services, which operates Cloudtail, elicited no response until press time on Monday.
Cloudtail’s letter has caused anxiety among many small sellers, as they have not yet been told where their current inventory and businesses will be moved. Cloudtail officials assured those vendors they would hear from the company soon, but did not provide any additional details on timelines, two of those vendors to the company told ET.
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“We received the notice last week and have tried to contact our respective Cloudtail managers, but we are unsure how the transition will go,” one of the traders said. “I’m aware that some of the vendors moving a larger volume of goods through Cloudtail have already secured new agreements on transferring business to other vendor entities.”
“As per our contracts they (Cloudtail) had said they would give us notice before terminating and it has now happened. suppliers will therefore be done gradually and will take relatively longer,” another seller told ET.
ET reported on March 28 that Cloudtail is starting to ship its inventory in major categories like electronics, health and personal care to some of the existing big sellers on Amazon India.
The notice from Cloudtail’s CEO marks the first instance of the Prione subsidiary officially notifying providers of Cloudtail’s closure.
Prione is a 76-24 joint venture between Infosys founder NR Narayana Murthy’s Catamaran Ventures and Amazon. Amazon offered to buy Catamaran Ventures’ stake and the deal was cleared by the Competition Commission of India.
ET reported on March 12 that Amazon had decided internally to shut down Cloudtail’s seller business on Amazon following antitrust regulator clearance.
VRP Telematics, Rocket Kommerce and Cocobulu Retail are among the top sellers that Cloudtail ships its existing inventory to, ET reported. Amazon’s decision is due to current regulations that do not allow an entity operating an online marketplace and its group companies to hold shares in any of the platform’s sellers, or have control of their inventory.
Amazon previously held a 49% stake in Cloudtail, which was formed in 2014 as a joint venture between Amazon and Catamaran. Amazon was forced to reduce the stake to 24% in 2019 to comply with regulations on foreign direct investment in e-commerce. With CCI allowing Amazon to buy Catamaran’s 76% stake in parent company Prione, Cloudtail cannot legally be a seller in the US retailer’s Indian market.
With Cloudtail officially notifying sellers of the cessation of business, it would be a significant end for the seller company, which played a vital role in Amazon’s initial success in India by transferring large portions of orders and delivering them. to consumers in one to two days.
In the financial year 2021, its revenue increased by over 45% to Rs 16,639 crore with a profit of over Rs 182 crore. Cloudtail was credited with shipping more than 50% of total sales on Amazon India at one point before the government tightened rules in 2016, stipulating that a single seller cannot account for more than 25% of total sales on an online marketplace.
Similar to Cloudtail, Amazon had established Frontizo Business Services in a joint venture with Patni Group in 2017. Frontizo is involved in offering customer support services to Amazon India, and its subsidiary Appario Retail is a big seller in the market. Amazon India. Appario Retail recorded revenue of Rs 14,628 crore in FY21 with a profit of Rs 54 crore.