Amazon’s presence in the Indian online retail industry is nothing short of revolutionary; it’s an absolute game-changer from the front of consumer and seller interactions. But what happens when we uncover one of its sneaky links?
Cloudtail India is one of the largest sellers on Amazon India, but this partnership between Infosys Founder NR Narayana Murthy’s Catamaran Ventures and Amazon is an evident conflict of interest. Amazon’s initial 49% stake in Cloudtail and Appario (another leading Amazon seller) was quite appalling, and at risk of favouritism, the government stepped in and mandated their stake to be reduced to a mere 24%.
The ornate agreement allying Amazon and Catamaran Ventures initially established Cloudtail as a “Special Merchant” in 2014, which led to a revenue stream of over $1 Billion in 2015 and accounted for 47% of Amazon’s sales in March 2016. Cloudtail’s alliance with Amazon led to an even stronger network of other prominent companies and rallied their dominance over Amazon’s sales.
But Indian legislation did not sit still, changing the entire dynamic with the 2016 e-commerce laws. Deciding that no seller can account for over 25% of overall sales on an e-commerce platform, Amazon was forced to reduce Cloudtail sales on their platform. However, Amazon ensured that they didn’t suffer any losses, establishing Appario in 2017 and allowing Amazon-owned sellers to potentially make up 50% of sales on the platform.
After flouting FDI rules for 7 years via Cloudtail and Appario, both of which commissioned about 35% of pan-India Amazon sales in 2019, the CCI (Competition Commission of India) launched an antitrust investigation into Amazon and Flipkart. This resulted in Amazon and Cloudtail mutually deciding to terminate their partnership in May 2022. The investigation was steered by trade bodies alleging that e-commerce firms were “offering predatory deep discounts and favouring select sellers that worked closely with them”, according to The Economic Times.
Despite the holes of scrutiny caused by Cloudtail, alternate sellers are slowly filling in its shoes. Bengaluru-based Dawntech Electronics, established by the Salarpuria-Sattva Group (Real Estate Developers in Southern India) are poised to take over Cloudtail’s electronics sales.
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