Amazon to delist Appario as seller, renews Frontizo JV for 3 years

Amazon has decided that Appario Retail would cease as a seller on the e-commerce giant’s platform. Appario Retail, one of the largest sellers on the platform, is housed under Frontizo Business Services – a joint venture between Amazon and the Patni Group.

The development comes at a time when Cloudtail, once the largest seller on Amazon’s India marketplace, shut operations on the e-commerce platform as a seller this year amid regulatory pressure. Cloudtail’s parent, Prione Business Services, was jointly owned by Catamaran, led by Infosys founder N R Narayana Murthy and Amazon.

The two parties said the joint venture has been renewed but Appario will cease to be a seller on both Amazon India and Amazon India Business – the wholesale platform – within the next 12 months. The Amazon-Patni JV for Frontizo has been renewed for three years, according to sources.

“Amazon and India’s Patni group-owned Zodiac Wealth Management LLP have agreed to renew their joint venture, Frontizo Business Services Private Limited,” said an Amazon spokesperson. “Partners have decided that Appario Retail Private Limited, a wholly owned subsidiary of Frontizo, will cease to be a seller on amazon.in, and amazon.in/business within the next 12 months. The partners will continue to explore new business opportunities, including helping businesses across India to scale up their online presence.”

In 2017, Amazon formed a joint venture with the Patni Family, the founders of Patni Computer Systems (PCS), a family business that was instrumental in establishing the Indian IT industry. The aim was to build an e-commerce and customer services platform as part of Amazon’s expansion plans in the country. Amazon India had launched the JV with Ashok Patni and his son Apoorva Patni’s Zodiac Wealth, which had 51 per cent stake in the business. The parent firm provided customer service for Amazon. However, Appario started its operations as an Amazon seller in 2017 in the area of mobile and electronics and became one of the largest sellers on the e-commerce platform. Appario Retail reported revenue of Rs 14,628 crore in FY21 with a profit of Rs 54 crore. 

Experts said that Indian regulations don’t allow foreign-owned entity running an online marketplace and its group companies to own stakes in any seller on the platform, or to have control over their inventory. Local traders have alleged that online retail companies were promoting their preferred sellers on the platforms.

In 2019, the JV related to Prione Business Services which houses Cloudtail, was restructured after the government stipulated that foreign e-commerce marketplaces cannot sell the products of their group companies on their platforms. Following this, Catamaran Ventures increased its stake in Prione to 76 per cent, reducing Amazon Asia’s stake to 24 per cent. A major chunk of Prione’s revenues came from its ownership of Cloudtail, which was one of the biggest and most profitable retailers on Amazon.

Last year in August, Amazon and Catamaran Ventures “mutually decided” to not continue their joint venture (JV) beyond the end of its current term. The JV, Prione Business Services, which had been running successfully for the past seven years, was coming up for renewal on May 19, 2022.

Cloudtail India Private Limited, reported its revenues for the financial year 2021-22 as Rs 19,090 crore, a 15 per cent jump since the last financial year. The company further reported a net loss of Rs 522 crore during the same fiscal. The company’s total expenses for the fiscal were reported as Rs 19,573 crore.

However, Cloudtail doesn’t sell on Amazon India anymore after Amazon reportedly bought a 100 per cent stake in Prione.Amazon’s move to remove Cloudtail as a seller on its platform had started in March this year after it sent termination notices to merchants and their businesses were transferred to new entities.

In March this year, the Competition Commission of India (CCI)  cleared Amazon’s proposal to acquire Catamaran Ventures’ entire stake in Prione Business Services Pvt. Ltd. 

In June this year, Cloudtail, reportedly accused the country’s antitrust agency Competition Commission of India (CCI), of illegally detaining its employees during a raid over suspected competition law violations.Cloudtail, among a handful of online sellers raided in an investigation of Amazon and Walmart's Flipkart over suspected preferential treatment on e-commerce platforms, argued in a court filing the detentions were cause for disallowing materials taken during the raid.