Amazon, Flipkart sellers gear up in battle for top slot

Sellers registered with Amazon India and Flipkart, two of the country’s largest etailers, are aggressively scaling up to become dominant players as the battle for e-commerce heats up amid restrictions on majority foreign ownership in multi-brand retail that keep the two companies from selling directly to consumers.

Cloudtail, a 49:51 joint venture between Amazon Asia and Infosys founder NR Narayana Murthy’s personal investment vehicle Catamaran forged last summer, is fast becoming a large seller on Amazon India, accounting for a little over 8% of products sold on the portal since it became operational in August last year.

ET could not independently confirm whether this makes Cloudtail the largest seller on Amazon India though one of the executives said it is one of the “five large sellers” on the portal

Madhu M, a former Amazon India executive and currently the chief executive at Cloudtail, has put together a team, including heads across categories such as apparel and electronics, to help source products for the retailer.

Prione Business Services, the entity that owns Cloudtail, has separately helped bring 6,000 sellers from 14 cities on Amazon India portal. All of these sellers independently sell goods on Amazon India, which has over 18,000 registered sellers.

“Cloudtail is a 100% subsidiary of Prione Business Services and furthers the vision of Prione, to enable small and medium businesses (SMBs) to take advantage of the potential of the fast growing digital economy,” said a spokesman for Prione, declining to share details on the growth of Cloudtail. “Cloudtail, an independent seller, focuses on offering unique and complementary products that other SMBS are unable to serve.”

Nonetheless, Cloudtail’s rise pales in comparison to Flipkart, which has about 4,000 sellers, and its dominant seller WS Retail accounts for 85% of total products sold on the portal that has been operational for the past three years.

WS Retail is controlled by Sujeet Kumar, who oversees the logistics arm, ekart, and Tapas Rudrapatna, who oversees the sourcing operations.

“The big benefit (of having one dominant seller) is that it enables them to fund discounts and dictate pricing policies in a very clever way,” said Anindya Ghose, professor of IT and marketing at New York University’s Leonard Stern School of Business. “They (WS Retail and Cloudtail) can suggest the discount amounts to the sellers and in fact compensate the sellers for the actual discounts given, either directly (via debit notes) or indirectly (by waiving listing fees or commissions).”

One of the ways Cloudtail has become a bigger player is through its ability to offer additional discounts on goods sold, said an executive. “So, for example, footwear and fashion merchandise sold through Cloudtail on Amazon India comes with more discounts than the same products sold by other sellers on the site. The sellers sell their goods through Cloudtail as it helps their sales because in any case the discounts get compensated by the company (Amazon),” said the executive, requesting not to be named.

Amazon India declined to share the percentage of goods sold by Cloudtail, which said it is not helping any one seller scale up with this “additional discount model,” saying it treats all sellers equally. “Cloudtail is able to offer additional discounts because the sourcing of goods could be better than other sellers registered on Amazon India,” said a company executive.

The Amazon executive maintained that the company has globally adopted the marketplace model, under which no one seller is dominant enough to influence the prices of goods. Last year, over 40% of five billion products shipped by Amazon were from third-party players.

Although Flipkart and Amazon India are not majority owners of WS Retail and Cloudtail, respectively, the two companies have operational control of these entities, according to executives familiar with the matter.

Emails sent to Catamaran and Flipkart remained unanswered.

Source : Amazon, Flipkart sellers gear up in battle for top slot, Varun Sood ( )


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