BENGALURU/NEW DELHI: Amazon India and the parent company of CloudTel, the biggest seller on the Amazon.in platform, will not continue its seven-year-old joint venture when it comes up for renewal in May next year. The announcement by the US e-commerce giant comes hours after Supreme court on Monday refused to stop antitrust investigations against the country’s biggest e-commerce players, Amazon and Flipkart.
Cloudtail’s parents, Priyan Business Services, jointly. is owned by catamaranMILF Led Infosys Founder NR Narayana Murthy and Amazon. The catamaran, which originally held a 51% stake in the joint venture, increased its stake to 76% in 2019 following the government’s Press Note 2 notification a year ago. The provisions in the note barred online marketplaces such as Walmart-owned Flipkart and Amazon from allowing their group companies to sell on the platform.
“Both partners today announced that they have mutually decided not to continue their joint venture beyond the end of their current term,” Amazon and Catamaran said in a joint statement.
Press Note 2 followed allegations from local trade bodies that large company-owned sellers on ecommerce platforms – such as Cloudtail on Amazon and WS Retail on Flipkart – offered deep discounts and did a substantial portion of the business, while smaller sellers became were victims of such anti-competitive practices.
Last year, the country’s antitrust watchdog, the Competition Commission of India (CCI), also ordered a probe against Amazon and Flipkart, acting on complaints from the Delhi Trade Federation, a body representing small sellers. The companies moved the Supreme Court against the CCI probe, denying any wrongdoing.
Amazon’s move to end its partnership with Catamaran grapples with tougher draft e-commerce rules issued by the consumer affairs ministry in June that seek to regulate flash sales and to promote some of its products. Want to rein in errant online marketplaces from manipulating search results on the platform. Seller
Amazon, which has stakes in other sellers on its platform such as Appario Retail, a joint venture with the Patni Group, did not disclose the reason for ending the partnership with the catamaran.
However, Praveen Khandelwal, spokesperson of traders body Confederation of All India Traders said, “It is now a cover-up exercise by Mr. Murthy. The fact that Amazon is violating the law and FDI policy through Cloudtail, Mr. Murthy should have known long ago or even at the time of entering into an agreement with Amazon.
Cloudtail reported a growth of 27.7% in its revenue at Rs 11,413 crore in 2020-21 as against Rs 8,945 crore a year ago. Cloudtail paid around 9% (Rs 980 crore) of its revenue as platform sales charges for the year ended March 2020, and around 4% in the year ended March 2018. Although the jump in commission is significant, it is still less than the average commission of around 25% that independent third-party sellers pay for selling goods on the platform.
Amit Agarwal, Global Senior VP and Country Head, Amazon India said, “Amazon and Catamaran entered into a joint venture in the early days of e-commerce in India with a shared vision to rapidly transform hundreds of thousands of small businesses. The digital world, by providing online capabilities, enables them to reach out to customers in India and globally. We are overwhelmed by how JV transcended its vision, helping online commerce grow through the tireless efforts of hundreds of its employees, positively impacting over 4.3 million small businesses, creating hundreds of thousands of jobs. Created, and contributed to India’s digital economy.
MD Ranganath, President, Catamaran, said, “We are delighted that Prion has leveraged global best practices for e-commerce in India, creating jobs, and helping millions of Indian customers with a wide range of products from across the country by leveraging technology. As our joint venture with Amazon reaches the end of its term, I look back on this successful partnership that unleashed the power of digitization and helped hundreds of thousands of SMBs in cities big and small We would like to thank Amazon for the partnership that has left behind a strong legacy of shaping e-commerce in India.
Cloudtail’s parents, Priyan Business Services, jointly. is owned by catamaranMILF Led Infosys Founder NR Narayana Murthy and Amazon. The catamaran, which originally held a 51% stake in the joint venture, increased its stake to 76% in 2019 following the government’s Press Note 2 notification a year ago. The provisions in the note barred online marketplaces such as Walmart-owned Flipkart and Amazon from allowing their group companies to sell on the platform.
“Both partners today announced that they have mutually decided not to continue their joint venture beyond the end of their current term,” Amazon and Catamaran said in a joint statement.
Press Note 2 followed allegations from local trade bodies that large company-owned sellers on ecommerce platforms – such as Cloudtail on Amazon and WS Retail on Flipkart – offered deep discounts and did a substantial portion of the business, while smaller sellers became were victims of such anti-competitive practices.
Last year, the country’s antitrust watchdog, the Competition Commission of India (CCI), also ordered a probe against Amazon and Flipkart, acting on complaints from the Delhi Trade Federation, a body representing small sellers. The companies moved the Supreme Court against the CCI probe, denying any wrongdoing.
Amazon’s move to end its partnership with Catamaran grapples with tougher draft e-commerce rules issued by the consumer affairs ministry in June that seek to regulate flash sales and to promote some of its products. Want to rein in errant online marketplaces from manipulating search results on the platform. Seller
Amazon, which has stakes in other sellers on its platform such as Appario Retail, a joint venture with the Patni Group, did not disclose the reason for ending the partnership with the catamaran.
However, Praveen Khandelwal, spokesperson of traders body Confederation of All India Traders said, “It is now a cover-up exercise by Mr. Murthy. The fact that Amazon is violating the law and FDI policy through Cloudtail, Mr. Murthy should have known long ago or even at the time of entering into an agreement with Amazon.
Cloudtail reported a growth of 27.7% in its revenue at Rs 11,413 crore in 2020-21 as against Rs 8,945 crore a year ago. Cloudtail paid around 9% (Rs 980 crore) of its revenue as platform sales charges for the year ended March 2020, and around 4% in the year ended March 2018. Although the jump in commission is significant, it is still less than the average commission of around 25% that independent third-party sellers pay for selling goods on the platform.
Amit Agarwal, Global Senior VP and Country Head, Amazon India said, “Amazon and Catamaran entered into a joint venture in the early days of e-commerce in India with a shared vision to rapidly transform hundreds of thousands of small businesses. The digital world, by providing online capabilities, enables them to reach out to customers in India and globally. We are overwhelmed by how JV transcended its vision, helping online commerce grow through the tireless efforts of hundreds of its employees, positively impacting over 4.3 million small businesses, creating hundreds of thousands of jobs. Created, and contributed to India’s digital economy.
MD Ranganath, President, Catamaran, said, “We are delighted that Prion has leveraged global best practices for e-commerce in India, creating jobs, and helping millions of Indian customers with a wide range of products from across the country by leveraging technology. As our joint venture with Amazon reaches the end of its term, I look back on this successful partnership that unleashed the power of digitization and helped hundreds of thousands of SMBs in cities big and small We would like to thank Amazon for the partnership that has left behind a strong legacy of shaping e-commerce in India.
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