Amazon in-house vendor Cloudtail's FY18 revenue growth accelerates

Cloudtail India Pvt. Ltd, one of the largest sellers on e-commerce major Amazon India, has recorded a 27% increase in its revenue for the financial year 2017-18.

For the year ended 31 March 2018, the company’s revenue rose to Rs 7,148.76 crore from Rs 5,631.86 crore the year before, which was a 23% increase, filings with the Registrar of Companies showed.

In 2015-16, it had registered a nearly four-fold rise in revenue to Rs 4,591.2 crore from Rs 1,145.4 crore the year before.

Cloudtail’s total expenditure for 2017-18 stood at Rs 7,158.66 crore, up from Rs 5,658 crore in the previous year. Consequently, net loss widened to Rs 4.11 crore from Rs 1.59 crore in the year prior.

Cloudtail generates its operational revenue by selling retail goods, which account for the bulk of its income, and from promotional schemes it participates in issued by third-party websites, the filings stated.

However, in 2017-18, the company showed no income from promotional services, while in 2016-17, that figure stood at Rs 100.58 crore. Revenue from the sale of retail goods amounted to Rs 7,058.60 crore, while that from the sale of scrap goods came to about Rs 90.16 crore.

Cloudtail sells consumer electronics, apparel, household items and consumer products on Amazon’s e-commerce platform.

A step-down subsidiary of Amazon, Cloudtail is owned by another private firm Prione Business Services Pvt. Ltd. It is a 51:49 joint venture between Amazon and Catamaran Ventures, the personal investment arm of Infosys co-founder and former chief NR Narayana Murthy.

According to regulations by the Department of Industrial Policy and Promotion, no single seller on an e-commerce platform can account for more than 25% of annual sales. Industry experts have said that over 60% of Amazon’s sales in the US come from its inventory, while third-party sellers account for the rest. As DIPP regulations do not allow for this, it suits Amazon to enter into JVs with larger players. This will help it expand aggressively and give it more control over its inventory and sellers, which will translate into better margins and customer experience.

Amazon has developed two subsidiaries—Cloudtail and Appario—to run and manage its own inventory in partnership with local vendors.

In the first year of its operations for 2017-18, Delhi-based Appario Retail Pvt. Ltd had posted standalone revenue of Rs 755 crore, the firm’s filings with the ROC showed.

Appario is a subsidiary of Frontizo Business Services Pvt. Ltd, a joint venture of Patni group (51%) and Amazon Asia Pacific Holdings (48%).