Amazon amends India business structure to bring back sellers

REUTERS/Mike Segar/File Photo

One of the biggest sellers on Amazon.com Inc’s India website has returned after the online retail giant changed its business structures to comply with new federal e-commerce curbs that took effect last week, two sources told Reuters.

India’s modified foreign direct investment rules that kicked in on Feb. 1, prevent companies such as Amazon from selling products from vendors where they, or their group companies, have equity holdings.

Amazon was forced to remove hundreds of thousands of items sold by top vendors Cloudtail and Appario as it indirectly held 49 percent equity stakes in both firms.

But on Thursday Cloudtail had returned with more than 300,000 products listed on Amazon, after the U.S. e-commerce firm cut its indirect holding to 24 percent, one of the sources with knowledge of the matter told Reuters. The stake was bought by the majority holders, Catamaran Ventures, the source said.

“We have no equity participation in any seller company on our marketplace,” Amazon said in a statement, without sharing details of the changes in its indirect holding of Cloudtail.

Catamaran, an investment firm launched by Infosys founder N.R. Narayana Murthy, said it had made “required changes” to comply with the rules, but did not elaborate.

Amazon is working on a similar restructuring for the other big seller, Appario, a second source said.

The sources declined to be named as they were not authorized to discuss the same with media.

The new rules were introduced after complaints from small Indian traders who said Amazon and Walmart-owned online retailer Flipkart used their control over inventory from affiliated vendors to unfairly offer discounts.

The Confederation of All India Traders (CAIT), which has pushed for tougher scrutiny of e-commerce players, on Thursday alleged Amazon’s latest move was a circumvention of the new rules.

The group would ask India’s industries department to clarify that online retailers should not hold direct or indirect stakes in their vendors, CAIT Secretary General Praveen Khandelwal told Reuters.

The industries department did not immediately respond to a request for comment.

Amazon and Walmart Inc had unsuccessfully lobbied against the latest rules and pushed for a delay in their implementation.

While product listings on Amazon have been disrupted, Flipkart has been less impacted as it had no equity holdings in its vendors.

Flipkart’s sellers were exhausting inventory from before the rules kicked in, and the company was working with its partners to ensure they complied with new norms when they sold new inventory on the platform, a person with direct knowledge of the matter said.

Flipkart declined to comment.

Also Read:

Amazon’s grocery service slowly resumes in India after disruption

Amazon, Walmart reel as Indian e-commerce norms plunge market into chaos

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.