Amazon, Narayana Murthy’s Catamaran to end Cloudtail JV next year

E-commerce giant Amazon and parent of its top Indian seller, Cloudtail have mutually decided to discontinue their joint venture after May 2022. ” The two partners have mutually decided to not continue their joint venture beyond the end of its current term,” Amazon and Narayan Murthy-owned Catamaran Ventures said in a joint statement. The development comes as the ecommerce giant faces allegations of giving preferential treatment to a small group of sellers, including Cloudtail. The two firms, however, did not disclose why they decided to end their association.

Registered as Prione Business Services, the joint venture enabled over 300,000 sellers and entrepreneurs to go online and provided 4 million merchants with digital payment capabilities. The joint venture helped merchants and small businesses access millions of customers in India, they said. The seven-year-old venture will cease operation in May 2022. The business collaboration also aimed at training and bringing on the e-commerce platform new-to-online merchants, including local shops like weavers and women-led startups.

“As our JV with Amazon reaches the end of its tenure, I reflect on this successful partnership that introduced the power of digitization and empowered hundreds of thousands of SMBs across big and small towns,” said M.D. Ranganath, President of Catamaran, in a statement.

The announcement comes on a day when the Supreme Court refused to halt an anti-trust probe initiated against Amazon and Flipkart for alleged violation of competition laws. Indian rules restrains ecommerce firms from holding inventory or selling items directly to consumers. To overcome this impediment, the e-retailers entered into a maze of joint ventures with local companies that operate as inventory-holding firms.

Subsequently in Dec 2018, the government tweaked the law forbidding brands from selling more than 25 percent of their sales via any single e-commerce marketplace. The new norms also barred exclusive tie-ups between e-commerce firms that follow the ‘marketplace model’ and vendors using their platform. The new guidelines affected the flexibility that e-commerce platforms had in doing business.

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In June this year, India proposed even stricter e-commerce rules that prohibit e-commerce players from running their in-house / private labels. The rules, among other things, propose that e-commerce companies not be allowed to organise flash sales that allows sales of goods or services at significantly reduced prices and high discounts.

Last month, the Indian Sellers Collective, a non-governmental trade association, wrote an open letter to Mr Narayan Murthy exhorting him to end his association with Amazon. The letter, according to news agency IANS, accused Mr Murthy of being “in cahoots with Amazon through a name-lending arrangement with Cloudtail acting as a front for Amazon’s retail business and defied the objectives of the policies of the Government of India”.