Cloudtail starts shipping business inventory to other sellers as closure nears

Vendors who supply to Cloudtail across categories like electronics, health and personal care, and smartphones are being sent new contracts for transfer of the business to new and existing seller entities on Amazon India.

Some of the electronics business of Cloudtail is being transferred to VRP Telematics, while its health and personal care business is being moved to Rocket Kommerce, the sources said.

“Some of the suppliers have already signed the contracts for the new arrangements while others are underway,” one of them said.

Amazon India executives who work with these sellers and suppliers have also informed them of Cloudtail shutting down soon.

An email sent to Amazon India and Cloudtail did not elicit any response till press time Sunday.

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ET first reported on March 11 that Amazon had decided to bring the curtains down on Cloudtail following the
March 9 approval from the Competition Commission of India (CCI)on Amazon’s bid to acquire 100% in Cloudtail parent Prione Business Services.

ETtech

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

Existing norms do not allow an entity running an online marketplace and its group companies to own equity in any of the sellers on the platform or to have control over their inventory.

Rocket Kommerce sells OnePlus and other smartphone brands on Amazon India. It is said to be increasing its play in the health and personal care brands area as well.

ETtech

VRP Telematics is an existing seller on Amazon India that also works for the ecommerce major’s private labels like Solimo and AmazonBasics. It has interest across online distribution and retailing and worked closely with Xiaomi on setting up its franchise, according to its website.

ET had on March 25 reported that
Cocoblu Retail is taking over the fashion and apparel business of Cloudtail.

People aware of the matter said Amazon does not plan to hold equity in these seller firms, or to set up another joint-venture unit with a similar structure as Cloudtail.

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

The current contract between Amazon and Catamaran Ventures for Cloudtail is valid till May 19, 2022, but the etailer is likely to bring the curtains down on Cloudtail sooner than that once the inventory transfer process ends and its share transfer with Catamaran is formally closed.

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

Soon after it was founded, Cloudtail became one of the most influential sellers on Amazon India, moving a large portion of total orders on the platform. In 2020-21, its revenue jumped by more than 45% to Rs 16,639 crore with a profit of more than Rs 182 crore. Cloudtail was clocking 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.

Consequently, 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 traders consistently bringing its relations with Amazon to complain to the government that the ecommerce firm was being partial to the seller firm.

Besides Cloudtail, Amazon set up 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 on the Amazon India marketplace. Appario Retail had clocked revenue of Rs 14,628 crore in FY21 with a profit of Rs 54 crore.