Ecommerce major Amazon.com has an indirect minority stake (size not disclosed) in Cloudtail India Pvt Ltd, the 51:49 joint venture company between Catamaran Ventures and Amazon Asia, reports Mint. This information was found through Amazon’s quarterly regulatory filing with the US Securities and Exchange Commission (SEC) last month.
Cloudtail India is a seller on the Amazon India portal. It is owned by Prione Business Services and claims to have 6,000 sellers from 14 cities on Amazon India as of January this year. We’ve written to Amazon India for a comment and will update this if we hear from the company. Note that Amazon added new funds worth Rs 1,980 crore (~ $290 million) into its Indian business unit in February.
During Amazon’s financials for the quarter ended March 31, 2015 (Q1 2016), Phil Hardin, director of investor relations said that the company was “happy to operate in any regime.. So frankly, the more clarity, the better,” he said, in a question to India’s regulatory environment and Cloudtail. A Business Standard report added Amazon as saying that it won’t be able to continue to operate in India and China if “we or our affiliates are unable to access sufficient funding or in China enforce contractual relationships with respect to management and control of such businesses.”
FDI in ecommerce and its effect of Amazon
This comes in the light of the Indian government, which in March stated that FDI in B2C ecommerce is disallowed in India, but FDI in marketplaces is allowed to continue. This ruling appears to be the outcome of a consultation process begun by the DIPP in January 2014. This was basically a means to disallow FDI in actual ecommerce which allows online retailers to own inventory, and preventing smaller online retailers from raising FDI, increasing their dependency on marketplaces. India’s ecommerce majors are essentially marketplaces and would want this because this shuts Amazon and it’s primarily inventory-led model out of India. The company has, however, managed to own parts of the process, by providing ‘Fulfilled by Amazon’ services for certain retailers, where it stores inventory in its warehouses for the sellers, and delivers goods to the buyers, again, on behalf of the consumers. It’s largely only different on paper, but this is clearly allowed, as per the circular.
Cloudtail driving sales on Amazon?
In October last year, Mint reported that Cloudtail had become Amazon India’s biggest seller, accounting for 40% of the company’s sales on the platform. The report added that Cloudtail had a capital of Rs 500 crore in September 2015, up from Rs 500,000 in July 2014, according to ROC documents. Cloudtail also has access to loans of up to Rs 300 crore.
Financials: According to a Business Standard report, Cloudtail reported a loss of Rs 31.7 crore on sales of Rs 1,145 crore in 2014-15. The company spent Rs 339 crore on foreign exchange transactions during this time as well.