Amazon may have found a way around India’s new e-commerce rules

Amazon India's fulfillment center in the southern state of Karnataka, near Atibelle on the outskirts of BengaluruIANS

  • Amazon India is converting its biggest sellers into wholesale companies in to order to be compliant with India’s new e-commerce rules.
  • Cloudtail and Appario — two of Amazon’s largest vendors —- will sell to a battery of third-party ‘preferred’ vendors according to reports.
  • Some of the items that are sold by Cloudtail and Appario are currently unavailable on Amazon India as the company changes its affiliates’ business models.
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 bars 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 according to a report by ETtech.

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.

Sources told ETtech that 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 the 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 issues 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.

See also:
The Indian government just dealt a serious surprise to Amazon and Flipkart — Here’s what that means for online shoppers

Mukesh Ambani may be the surprise winner from India's new rules hurting Amazon and Walmart

India’s new e-commerce policy has rivals Flipkart and Amazon teaming up to counter the new directive — and the ‘Republic Day’ sale will probably be their last
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