Amazon India top seller Cloudtail’s revenue rises fourfold to Rs4,600 crore
Bengaluru: Cloudtail India Pvt. Ltd, a joint venture between Amazon.com Inc. and Infosys Ltd co-founder N.R. Narayana Murthy’s Catamaran Ventures, posted a fourfold increase in revenue in the year ended March 2016 and received fresh funds amid a market-share battle between Amazon and Flipkart.
Cloudtail, the largest seller on Amazon India’s online marketplace, ended the year with revenue of Rs4,591.2 crore, compared with Rs1,145.4 crore in the year-ago period, according to documents filed with the Registrar of Companies (RoC). Cloudtail also received a fresh infusion of capital. According to the regulatory documents, the firm’s authorized share capital jumped nearly 40% to about Rs500 crore.
Cloudtail also incurred heavy expenses during the year, which overshadowed its overall sales. According to the documents, expenses stood at Rs4,621 crore, up from the Rs1,176 crore the previous year. Cloudtail’s loss for the year narrowed marginally to Rs30.2 crore, compared with Rs31 crore the previous year.
In October 2015, Mint reported that Cloudtail was the primary growth driver for Amazon India, generating at least 40% of the company’s sales in some months, and being particularly dominant in electronics and fashion, two of the three largest categories for Amazon India (promoted by Amazon Seller Services Pvt. Ltd).
Because of India’s foreign direct investment (FDI) rules, Amazon works as a marketplace in India, connecting buyers with third-party sellers on its platform.
In 2014, Amazon Asia and Catamaran Ventures jointly formed Cloudtail India to sell items such as books, phones and exclusive Amazon merchandise on Amazon.in under the seller name, Cloudtail, according to documents available with RoC.
Cloudtail India is a fully owned unit of Prione Business Services Pvt. Ltd, according to documents filed recently with RoC. Prione, in turn, is owned by Catamaran Management Services Pvt. Ltd, the acting trustee of Hober Mallow Trust (51%), Amazon Asia Pacific Resources Pvt. Ltd (48%) and Amazon Eurasia Holdings (1%). Apart from owning Cloudtail, Prione also helps Amazon India sign up and train sellers across the country.
The expansion of Cloudtail underlines how Amazon has used gaps in the law to continue to have a direct-selling model in the country that bans e-commerce companies from selling goods directly to shoppers.
Amazon did not respond to an email seeking comment. Cloudtail could not be reached for comment at the time of publication.
In March, the government allowed 100% foreign direct investment in online retail of goods and services under the marketplace model but prohibited marketplaces from having one dominant seller. The rules cap total sales of one vendor at 25% and also ban marketplaces from affecting product prices, effectively outlawing discounts.
Earlier this year, parent Amazon.com Inc., also disclosed to the US stock markets regulator that the company owns an indirect minority stake in a third-party seller on Amazon India. Amazon made this disclosure in its quarterly regulatory filing with the US Securities and Exchange Commission.
According to documents filed with RoC, Amazon India has also received a fresh infusion of Rs2,010 crore of capital, taking its total capital infusion till date to roughly Rs7,000 crore. Amazon Seller Services, which represents Amazon’s marketplace arm in India, also posted a revenue of Rs2,217 crore for the year ended March 2016, according to RoC documents.
Amazon has so far committed to spend at least $5 billion on its business in India.