SUMMARY
Amazon India had reportedly channeled most of its B2B services through its main seller Cloudtail
Amazon India is expected to reach $70 Bn in GMV and $11 Bn in net sales by 2027
Amazon India uses its wholesale unit as a distribution channel that sources products from brands directly
Amazon Wholesale, the US-based ecommerce giant’s Indian Business-to-Business (B2B) platform, reportedly raked in revenue of $1.68 Bn (INR 12,224 Cr) in FY18, up 73% from $970 Mn (INR 7047 Cr) in FY17.
Amazon India uses its wholesale unit as a distribution channel that sources products from brands directly and then supplies these to third-party vendors to sell on their online marketplaces. Walmart-owned Flipkart also has its own B2B distributor called Flipkart India.
According to the documents sourced from Tofler, a business intelligence platform for India, Flipkart India’s revenue saw a jump of 40% to $2.19 Bn (INR 21,438.65 Cr) in FY18.
The growth since FY17 has been attributed to the change in ecommerce guidelines in 2016, which mandated that sales from a single seller could not exceed 25% of the total gross merchandise volume (GMV) of a marketplace.
Prior to this rule, Amazon India had reportedly channeled most of its B2B services through its main seller Cloudtail. However after 2016, the ecommerce company started using Amazon Wholesale as a buyer and distributor to new sellers.
It also set up another seller entity Appario, in partnership with Patni Group last year, which recorded a total income of $104.44 Mn (INR 759 Cr) in the financial year 2017-18.
This has seen Cloudtail’s revenue growth stagnate, even as several subsidies to the entity from the ecommerce company have been cut. Cloudtail, the joint venture between Amazon and Catamaran, has reported a revenue increase of 27% to $966 Mn (INR 7149.21 Cr) in FY18 for the period ending March 31, 2018, according to the company’s regulatory filings.
Amazon India’s B2B wholesale distributor purchased goods worth $1.14 Bn (INR 7,734 Cr) in FY17, in comparison to $591.1K (INR 4 Cr) in the previous year.
Further, a major boost to Amazon’s Indian operations came with a Citi research report suggesting that Amazon India could be valued at $16 Bn right now. The report added that Amazon India is expected to reach $70 Bn in GMV and $11 Bn in net sales by 2027.
Despite registering almost a billion dollars in loss for the fiscal year 2017-18, Amazon’s India Unit, Amazon Seller Services has continued to place big bets on India’s ecommerce and offline retail sectors
