Amazon ends joint venture with Narayana Murthy catamaran


BENGALURU / NEW DELHI: Amazon India and the parent company of Cloudtail, the biggest seller on the platform, will not continue their seven-year-old joint venture when it is renewed in May next year . The U.S. e-commerce giant’s announcement came hours after the Supreme Court on Monday refused to stop antitrust investigations against the nation’s biggest e-commerce players, Amazon and Flipkart.
Cloudtail’s parent company, Prione Business Services, is jointly owned by Catamaran, headed by Infosys founder NR Narayana Murthy and Amazon. Catamaran, which originally held 51% of the JV, increased its stake to 76% in 2019 following the notification of Government Press Note 2 a year earlier. The provisions of the note prohibited online marketplaces such as Flipkart and Amazon, owned by Walmart, from allowing their group companies to sell on the platforms.
“The two partners announced today that they have decided by mutual agreement not to continue their joint venture beyond the end of its current term,” Amazon and Catamaran said in a joint statement.
Press Note 2 followed allegations from local business organizations that large, company-owned sellers on ecommerce platforms – such as Cloudtail on Amazon and WS Retail on Flipkart – were indulging in big discounts and carving out the lion’s share of the business, while small sellers fell victim to such anti-competitive practices.
Last year, the country’s antitrust watchdog, the Competition Commission of India (ICC), also ordered an investigation against Amazon and Flipkart, following complaints from Delhi Vyapar Mahasangh, an organization representing small sellers. The companies have taken the ICC investigation to the Supreme Court, denying any wrongdoing.
Amazon’s decision to end its partnership with Catamaran comes as the industry grapples with a draft of stricter e-commerce rules released by the Consumer Department in June that aims to regulate flash sales and to prevent stray online marketplaces from manipulating the search results on their platforms to promote certain sellers.
Amazon, which has stakes in other suppliers on its platform such as Appario Retail, a joint venture with the Patni Group, has not disclosed the reason for ending its partnership with Catamaran.
Praveen Khandelwal, spokesperson for the traders organization Confederation of All Traders of India, however said: “This is now a cover-up exercise on Mr Murthy’s part. The fact that Amazon violates the law and policy of IDE via Cloudtail must be known to Mr. Murthy long before or even when entering into a deal with Amazon.
Cloudtail reported a 27.7% increase in revenue to Rs 11,413 crore in 2020-2021, up from Rs 8,945 crore the previous year. Cloudtail paid around 9% (Rs 980 crore) of its revenue as a platform selling fee for the fiscal year ended March 2020, and around 4% during the fiscal year ended March 2018. Although The increase in commissions is significant, it remains lower than the average commission of approximately 25% that independent third-party sellers pay to sell goods on the platform.
Amit Agarwal, Global Senior Vice President and Country Head – Amazon India, said, “Amazon and Catamaran formed an early-stage e-commerce joint venture in India with a common vision to transform hundreds of thousands of small businesses in a rapidly changing. digital world, by providing online capabilities enabling them to access customers both in India and globally. We are touched by how the joint venture has gone beyond its vision, helping e-commerce evolve through the tireless efforts of hundreds of its employees, positively impacting over 4.3 million small businesses, creating hundreds of thousands of jobs and contributing to India’s digital economy. ”
MD Ranganath, President of Catamaran, said: “We are pleased that Prione has leveraged global best practices for e-commerce in India, created jobs and provided millions of Indian customers with access to a wide selection of products. across the country by leveraging technology. . As our joint venture with Amazon comes to the end of its tenure, I reflect on this successful partnership that has introduced the power of digitization and empowered hundreds of thousands of SMEs in cities large and small. We would like to thank Amazon for the partnership which leaves behind a strong legacy of shaping e-commerce in India. ”
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