Cloudtail news: Cloudtail begins shipping trade inventory to other sellers as closing nears

Bengaluru: Cloudtail, one of the biggest sellers on Amazon India, started transferring its inventory and trading rights to other sellers in the e-commerce market before it was shut down, several people with knowledge of the matter told ET. .

Suppliers who supply to Cloudtail in categories such as electronics, health and personal care, and smartphones are receiving new contracts for the transfer of business to new and existing seller entities on Amazon India.

Part of Cloudtail’s electronic business is moving to VRP Telematics, while its health and personal care business is moving to Rocket Kommerce, the sources said.

“Some of the vendors have already signed the contracts for the new arrangements while others are in the works,” one said.

Amazon India executives who work with these vendors and vendors have also informed them of Cloudtail’s upcoming shutdown.

An email sent to Amazon India and Cloudtail elicited no response until press time on Sunday.

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ET first reported on March 11 that Amazon had decided to pull back the curtain on Cloudtail following the India Competition Commission’s (ICC) March 9 approval of Amazon’s bid to acquire 100 % of Prione Business Services, the parent company of Cloudtail.

How Cloudtail was liquidated_Graphic_ETTECHETtech

Amazon is buying Catamaran Ventures’ 76% stake in Prione. Previously, the Jeff Bezos-owned company held a 49% stake in Cloudtail, which was formed in 2014 as a joint venture between Amazon and Catamaran, the investment office of Infosys founder NR Narayana Murthy. But was forced to reduce its stake to 24% in 2019 to comply with foreign direct investment (FDI) regulations for e-commerce.

Existing standards do not allow an entity operating an online marketplace and its group companies to own a stake in any of the platform’s sellers or have control over their inventory.

Rocket Kommerce sells OnePlus and other smartphone brands on Amazon India. He is also said to be upping his game in health and personal care brands.

Cloudtail has been crucial to Amazon's success in India_Graphic_ETTECHETtech

VRP Telematics is an existing seller on Amazon India that also works for the e-commerce major’s private labels like Solimo and AmazonBasics. According to its website, it is interested in online distribution and retail and has worked closely with Xiaomi to establish its franchise.

ET had announced on March 25 that Cocoblu Retail was taking over Cloudtail’s fashion and apparel business.

People with knowledge of the matter said that Amazon does not plan to own shares in these selling companies, nor to create another joint venture unit with a structure similar to that of Cloudtail.

ET had said the same in its March 11 report which also stated that Prione’s existing business of onboarding sellers for the Amazon India marketplace is expected to continue.

Amazon’s current deal with Catamaran Ventures for Cloudtail runs until May 19, 2022, but the retailer is likely to roll back the curtains on Cloudtail sooner than that once the inventory transfer process is complete and its share transfer with Catamaran is officially closed.

Sources have reiterated that a significant portion of Cloudtail employees are likely to be transferred to various roles within Amazon India.

Soon after its inception, Cloudtail became one of the most influential sellers in Amazon India, shifting a large chunk of total orders to the platform. In 2020-21, its revenue jumped over 45% to Rs 16,639 crore with a profit of over Rs 182 crore. Cloudtail was recording 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.

Therefore, Amazon India had to diversify its key seller base to work with more sellers.

Cloudtail has been controversial for Amazon India with smaller online sellers and offline merchants constantly bringing its connections to Amazon to complain to the government that the e-commerce company was biased towards the selling company.

Apart from Cloudtail, Amazon established Frontizo Business Services in joint venture with Patni Group in 2017. While Frontizo is involved in offering customer support services to Amazon India, its subsidiary Appario Retail is a key seller in the Amazon marketplace. India. Appario Retail had recorded revenue of Rs 14,628 crore in FY21 with a profit of Rs 54 crore.

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