Amazon’s wholesale unit in India reported an incredible raise in turnover of nearly 2,700 times for fiscal year 2016-17, budding as a major contributor to the global retail giant’s overall operations in the country as it adjusted to regulatory restrictions.
The surge in the turnover came after the govt issued guidelines in early 2016 insisting that sales from a single vendor could not exceed 25% of the total gross sales of an online marketplace. Subsequent to this, the retail giant determined to use Amazon Wholesale India as a distributor, especially of smartphones, to a slew of new vendors on its India marketplace while staying within lines drawn by government policy. Selling smartphones, a key category for ecommerce in India, through a few vendors offers the company more control in terms of inventory and logistics.
“Amazon is likely focusing on wholesale for exclusive phone deals since this offers better negotiating power with smartphone brands,” said Satish Meena, senior forecast analyst at Forrester Research.
The unit’s turnover in 2014-15 was Rs 6.6 crore. Amazon Wholesale India’s revenue increased to Rs 7,047 crore in 2016-17 from Rs 2.63 crore in the year prior, show numbers filed with the Registrar of Companies and sourced from Tofler.
Amazon’s annualized gross sales are about $5 billion (about Rs 32,000 crore) from all its businesses in India, as per an analyst. This includes its ecommerce marketplace, grocery delivery, and Prime subscription services.
Amazon registered a 41% growth in revenue to Rs 3,128 crore in 2016-17 via Amazon Seller Services and its main marketplace business in India.
Amazon has not expanded on specific queries, but Amazon Wholesale India exerted with more than 15,000 vendors selling across categories including groceries and electronics. The India marketplace has 160 million products that are being sold by about 250,000 vendors.
According to some industry members through Cloudtail India, Amazon’s largest vendor, Amazon radically reduced sales of smartphones, late last year. This reflected in Cloudtail’s revenue growth dipping to 24% in 2016-17 from about 300% in the year before.
Amazon Wholesale India has also benefitted from frequent capital infusions from its global parent. It has received Rs 115 crore in June last year, followed by Rs 160 crore that September and Rs 100 crore in December 2016. It received another Rs 341 crore in May last year that Amazon was focusing on a new set of vendors in India to reduce its dependency on Cloudtail, which is a joint venture between Amazon and Infosys cofounder Narayan Murthy’s personal investment vehicle Catamaran.
It is also reported how Amazon was focusing on more such JVs to create new vendor entities. In September, Amazon set up a JV with the Ashok Patni Group to make stronger its customer service unit as well as to set up a subsidiary that will be a vendor on Amazon India.
The global giant is also in talks with Dabur’s promoters for another JV.
Amazon recently launched a B2B marketplace for small and medium businesses, called Amazon Business, on the Amazon.in website. It had earlier launched Amazonbusiness.in under Amazon Wholesale as a pilot project two years ago for retailers in Bengaluru and Mangaluru. This was an invite-only model and had consumables as the primary category. Amazonbusiness.in is a wholesale retailer while Amazon Business is a pure marketplace, the company had said.
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Jatin Bhatia, From ITvoir News Desk