When reports of Amazon India giving a preferential treatment to sellers like Cloudtail and Appario Retail came in earlier this year, the etailer denied all these allegations and reiterated that it has equal policies for all. Well, Cloudtail results are here to clear the picture a bit.
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, as per the company’s regulatory filings. This is a slight increase from FY17, wherein it took a 24% jump on FY16 revenues.
However, this is a major drop from the 300% revenue growth Cloudtail achieved in FY16 over the FY15 revenues.
Cloudtail also saw a rise in its expenses. It recorded a 27% rise in expenses reaching $967.7 Mn (INR 7158.66 Cr) during FY18, thereby incurring losses worth $540K (INR 4 Cr), compared to a profit of 4202K (INR 1.5 Cr) the previous year.
Amazon India has also taken steps to reduce the subsidies offered to Cloudtail. As a result, the Cloudtail’s platform selling fees on Amazon has been increased to 442.5 Mn (INR 315 Cr) from $32.4 Mn (INR 240 Cr) earlier. Also, Cloudtail saw a decrease in its income from promotional services to Zero in FY18, as compared to $13.5 Mn (INR 100 Cr) in F&17. This is an income which the company registers by participating in the promotional schemes issued by Amazon India on its platform.
Amazon India is however still facing a protest from a group of sellers. As per the All India Online Vendors Association (AIOVA) for Sellers, Amazon India has a subsidised platform fee for Cloudtail and Appario Retail.
Though Cloudtail’s platform fee has been increased, it is still less than 5% of its total sales, which is the norm to be followed. Similarly, for Appario Retail, the fee is just 2% of its total sales. However, the other non-affiliated sellers have to pay between 30-40% of the sales with fees comprising commission, logistics, storage, packaging, fixed fees among others.
AIOVA has already reached out to Competition Commission of India (CCI). In its appeal, AIOVA has asked for a penalty against Amazon India as this is affecting the business of the smaller sellers who depend on the platform.
Amazon India is not the only player here. A group of online sellers affiliated to Flipkart has also requested CCI to set up a fair trade regulatory body to overlook the sector. They had also requested the commision to restrict large sellers from participating in the Flipkart annual festive sale — The Big Billion Days.