The Great Indian Ecommerce #Jugaad: Cloudtail Makes A Comeback; Flipkart Lists Distributors As Sellers!

Ever since the new ecommerce policy came into picture, existing biggies: Amazon India and Flipkart are having sleepless nights. Billions of dollars of investments are at stake, and sales are down approximately 30% for them.

But now, as the clouds are clearing, and things becoming more transparent, FDI backed ecommerce portals are slowly, but gradually coming back into shape.

Two major developments have taken place in this regard, and both are good news for the sector.

Amazon’s Cloudtail Makes A Comeback: But How?

After February 1st, when the new ecommerce policy was enforced, Amazon and Flipkart have collectively experienced 30% less sales.

In Amazon’s case, their largest reseller: Cloudtail and Appario had to stop selling, as the new ecommerce rules prohibit them from selling on Amazon. Amazon had more than 49% stake in Cloudtail, and 49% stake in Appario. Due to this, these resellers cannot sell on Amazon.

But now, Amazon India has decided to reduce its stake to 24% in Cloudtail, and Appario both. This means that with less than 25% stake in these resellers, Amazon can use them as before.

To make things more transparent, Cloudtail will also list their products on Snapdeal, IndiaMart etc, and even have their own website to sell products.

Hence, the plan is to make Cloudtail and Appario as fully independent entities, and sellers, which will have negligible influence on Amazon’s overall ecosystem.

In Cloudtail, NR Narayana Murthy’s Catamaran Ventures’ stakes will increase to 76% from 51% earlier, and Patni Group’s 51% stake in Appario will also be increased to 76% to make it compatible with the ecommerce laws.

Although this sounds like a corporate restructuring, but in reality, it is a jugaad, or arrangement to successfully navigate the new ecommerce rules.

How long it will work, no one knows now.

Flipkart’s Jugaad: List Distributors As Sellers

Meanwhile Flipkart, which hasn’t felt the heat much, too has decided to work on some ‘arrangement’. As per reports coming in, Flipkart will list the main distributors of the hottest selling products such as Samsung smartphones, appliances etc as sellers on their platform.

This will help them to bypass the rule which states that no single vendor can sell more than 25% of the overall goods on any FDI powered ecommerce marketplace.

Flipkart had already delisted WSRetail, which was their own reselling company, and this meant that unlike Amazon India, their sales weren’t much affected.

A person familiar to this development said, “Flipkart is ideally looking for companies with revenue of Rs 1,000-2,000 crore that have little or no online presence so that Flipkart could push its products worth Rs 250-500 crore through each of them,”

Once a distributor from say Samsung is listed, they can sell any product they want.

This arrangement has been done so that Flipkart sells only via trusted sources, and the user experience is not hampered.

We will keep you updated, as more details come in.