Advertisment

Amazon India’s top seller, Cloudtail to cease ops from May 2022

author-image
Soumyarendra Barik
New Update
Cloudtail

Cloudtail India, one of the largest sellers on Amazon India’s e-commerce platform, will shut down operations from May 2022. Cloudtail is a joint venture between Amazon and the N.R. Narayana Murthy-owned Catamaran Ventures, and the two companies announced on August 9 that they would not renew the seven year old partnership. 

This is a significant development because Cloudtail has been a top Amazon seller  in India for a long time, attracting significant ire from trade unions and other smaller sellers on the platform who have accused Amazon of giving preferential treatment to its own venture. 

Cloudtail India had closed FY20 with a topline of Rs 11,413 crores, and a profit of Rs 68 crores. It is anyone’s guess where that would have placed it, had it considered an IPO in the current market. Experts we spoke to hazarded a valuation range of $8-11 billion for the firm, conservatively.

While Amazon has not mentioned any specific reasons behind shutting down Cloudtail from next year, it comes at a critical time; just hours after the Supreme Court rejected petitions filed by Amazon and Flipkart which sought a stay on an antitrust probe by India’s competition watchdog. 

We have reached out to Amazon for more details and will update the story in case the company responds.

The Competition Commission of India or CCI’s probe into the two companies dates back to 2019 following a complaint filed by the Delhi Vyapar Mahasangh, a group of MSME (Micro, Small and Medium Enterprises) smartphone traders. Interestingly, Catamaran ventures, despite owning 76% in Cloudtail, does not list it in its portfolio of firms on its website. 

DVM had accused Amazon and Flipkart of giving preferential treatment to certain preferred sellers due to the nature of its ownership arrangements with them.

However, on Monday the apex court quashed any hopes that Amazon and Flipkart may have had of stopping the antitrust investigation, when it allowed it to go on. 

New draft e-commerce consumer protection rules also prohibit parties and associated enterprises related to e-commerce companies from being listed as sellers on their platform. 

It is also worth remembering that India’s foreign investment rules in e-commerce prohibit a foreign company running an e-commerce marketplace from owning a stake in any of the sellers on their platform. These entities can also not exercise control over these sellers’ inventory. 

When these rules were implemented in 2018, Amazon had suspended operations of Cloudtail for a week and after some restructuring, reduced its stake in the seller to 24% from an earlier 49%. 

Cloudtail India ecommerce Wholesale Amazon
Advertisment
Fetch New URL