Daily Management Review

Amazon Makes Business Structure Changes, Brings Back Big Seller: Reports


02/07/2019




Following some of the structural changes to its business being done by Amazon in India to adhere to regulatory changes brought in by the Indian government to limit some e-commerce possibilities, there has been a return of one of the biggest sellers on the e-retailer’s India website, according to media reports.
 
According to a change in the foreign direct investment rules brought in by the Indian government which came into effect from February 1 disallowed e-retailer like Amazon from using their platforms for selling of goods from those companies where the e-retailers or any of their sister concerns are investors or posses equity holdings.
 
This change forced Amazon to delist hundreds of thousands of items from its platform that were sold by its top vendors Cloudtail and Appario as the US retailer had a 49 per cent indirect stake in both the vendor companies.
 
But according to reports, Amazon has reduced its holdings in one of the companies – Cloudtail, to 24 per cent and as a result the e-retailer again listed about 300,000 products from the company on its website starting Thursday.  The reports also claimed that the stakes sold out by Amazon were bought by the majority holders, Catamaran Ventures.
 
“We have no equity participation in any seller company on our marketplace,” Amazon said in a statement. The company however did not give any further details about any ownership changes in the indirect stakes in Cloudtail.
 
It had made “required changes” to comply with the rules, Catamaran, an investment firm launched by Infosys founder N.R. Narayana Murthy, told the media without furnishing any further details.
 
According to sources in media reports, similar restructuring is being made by Amazon in the other large vendor Appario.
 
There were complaints filed to Indian authorities by small Indian traders alleging that they were being put at a disadvantage by Amazon and online retailer Flipkart, owned by Walmart, as both the companies were using the control that they enjoyed over inventory to put other smaller vendors at a disadvantage.
 
However the latest move by Amazon to reduce the indirect stake in the vendor companies was criticised to be in violation of the new rules by the Confederation of All India Traders (CAIT), the industry body that has been calling for stricter scrutiny of e-commerce companies in India.
 
CAIT Secretary General Praveen Khandelwal told the media that the body would approach the industries department of the Indian government to demand that neither direct or indirect stake in vending companies should be held by the online retailers.
 
There were no comments available from the industries department.
 
Both Amazon and Walmart Inc had attempted to prevent the implementation of the new regulation or delay their implementation.
 
There has however been little impact on Flipkart because the company has no equity holdings in vendor companies unlike Amazon whose product listings were significantly impacted. Even before the implementation of the new regulations, inventory were being exhausted by the seller on Flipkart and the e-retailer was taking measures to ensure that it and its partners were able to comply with the new regulations at the time oif selling of new inventory on the platform according to news reports in India.
 
(Source:thenewsboxx.com)






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