Bengaluru: After the Competition Commission of India (CCI)
approved Amazon’s bid to acquire Cloudtail parent firm Prione Business Services, the US ecommerce major will shut Cloudtail as a seller on its platform in India in about a month.

Amazon is now looking to close the transaction with Catamaran Ventures, people briefed on the matter said. The contract between Amazon and Catamaran Ventures – NR Narayana Murthy’s investment office –-
is slated to expire on May 19, but Amazon is now expected to close Cloudtail before that, sources close to the development said.

Catamaran Ventures holds 76% in Prione Business Services while Amazon holds the rest. Amazon used to hold 49% in Prione In 2019 but to comply with the new foreign direct investment regulations for ecommerce, it was forced to reduce its stake to 24%.

The current thinking of people briefed on the matter is that Amazon is unlikely to set up another joint venture to house a seller similar to Cloudtail.

“With CCI’s approval in place, now the formal process of the transaction will happen. It could be done in about a month. Cloudtail will not operate as a seller on the marketplace once the shares are transferred to Amazon,” one of the people cited above said. ”Currently there is no plan to set up another joint venture for a seller like Cloudtail.”

Existing regulations prohibit an entity running an online marketplace and its group companies from owning equity in any of the sellers on its platform or having control over their inventory.

An Amazon India spokesperson declined to comment on the matter.

Prione’s current business of onboarding sellers on Amazon India through its fleet-on-street team will continue, the people cited above added. ET had reported in December that Prione’s business was unlikely to be affected by the proposed transaction.

People aware of Amazon’s plans said the current inventory of Cloudtail, one of the largest sellers on Amazon India, would have to be distributed among other vendors and sellers. This exercise is expected to begin closer to the Amazon-Catamaran transaction. The price at which Catamaran is selling its 76% stake to Amazon is not yet known.

Cloudtail’s closing is significant given the critical role it played in helping Amazon India service the bulk of orders quickly. While Amazon India has been trying to reduce its dependency on Cloudtail following the tightening of FDI rules on ecommerce, it remains one of the largest sellers on the platform.

Smaller online sellers and offline traders have long complained that Amazon is partial to large sellers like Cloudtail.

Cloudtail’s estimated 1,000-1,200 employees will be treated as Amazon’s employees once the transaction closes. “Cloudtail and Prione will be Amazon’s assets and liabilities,” a source said.

A significant number of them already work closely with Amazon and are likely to transition to other roles at Amazon or Prione. However, it is not clear yet if Amazon will absorb all the staff. When Amazon and Catamaran announced the stake sale on December 22, Prione CEO Pankaj Jathar told Cloudtail employees that they would remain an “integral” part of the joint-venture unit Prione.

Amazon and Catamaran had set up Cloudtail in 2014, and it soon emerged as one of the largest sellers on Amazon in India. In the fiscal year 2021, its revenue jumped over 45% to Rs 16,639 crore with a profit of more than Rs 182 crore. At one point, Cloudtail was clocking more than 50% of total sales on Amazon India. That was before the government tightened rules in 2016, saying no single seller could account for more than 25% of total sales on an online marketplace.

Following that, Amazon India started working with more sellers. It also struck up a joint venture with Patni group in 2017 to set up Frontizo Business Services. While Frontizo offers customer support services to Amazon India, its subsidiary Appario Retail is another major seller on Amazon’s India marketplace. It reported revenue of Rs 14,628 crore in FY21 with a profit of Rs 54 crore.

Stay on top of technology and startup news that matters. Subscribe to our daily newsletter for the latest and must-read tech news, delivered straight to your inbox.