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Amazon May Have Found A Way Around India’s New E-commerce Rules

Some items might be unavailable on Amazon India right now but that will soon change as Amazon India is reportedly turning two of its largest vendors — Cloudtail and Appario into wholesale companies.

In order to be compliant with India’s new e-commerce rules that bar e-commerce companies from selling products supplied by affiliate companies on their shopping sites — Amazon is going to start selling via vendors instead of selling directly to customers.

Retail to wholesale

The e-commerce policy only dictates that e-commerce giants like Amazon India can’t sell products to customers if it the vendor supplying the product is a company in which Amazon has stake.

While Cloudtail is a 49-51 joint venture between Amazon and Catamaran India, Appario is a 49-51 joint venture between the online e-commerce giant and the Patni Group.

If Cloudtail and Appario were to become wholesale vendors instead, then they would only be supplying their products to third-party ‘prefered’ vendors through Amazon Business in India — Amazon’s Indian B2B marketplace.

These third-party ‘preferred’ vendors would then sell those products on the Amazon India portal. Every wholesale vendor has the right to pick its preferred retailer for the products they are selling.

Amazon hasn’t completely set aside the idea to sell off its stake to order to comply with the new guidelines, but the wholesale route is a faster process, it will comply with the new forms and Amazon still continues to enjoy the value from both the companies.

The good news for consumers is that items supplied by Amazon will still be available on the site. Category managers at Amazon India are currently figuring out which vendors are ‘preferred’ sellers for each of the brand’s categories.

The Amazon Echo smart speakers are still on sale, even though Appario is no longer the supplier.

Other brands should be live in the marketplace soon once the business model has been realigned.

The new guidelines were issued on December 26 after which, both e-commerce giants — Walmart and Amazon teamed up to seek an extension of the February 1 deadline but with no success.

Local e-commerce players are looking forward to the much-anticipated relief from competing against deep discounts and traditional retailers are hoping to regain some market share.―Business Insider

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