Amazon will be shutting down Appario Retail, one of the largest sellers on its platform, in a year, after which it will no longer be listed as a seller on the e-commerce portal, the companies said in a joint statement on Monday.
Appario Retail is a unit of Frontizo Business Services Private Limited, a joint venture (JV) between Amazon and the Patni group. The decision was despite the two companies announcing that they would renew their partnership. The shuttering down of Appario comes after Amazon shut Cloudtail — the largest seller for the e-commerce giant — earlier this year.
“Amazon and India’s Patni group-owned Zodiac Wealth Management LLP have agreed to renew their joint venture, Frontizo Business Services Private Limited. 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,” the joint statement said.
To comply with regulatory changes in the Indian e-commerce space, Seattle-based Amazon earlier reduce its holding in both Cloudtail and Appario to around 24% since domestic regulations no longer allow marketplaces to have controlling stake in sellers on their platform. Similarly, Walmart-owned Flipkart had also reduced its stake in WS Retail, one of its largest sellers.
“Amazon and Walmart use large sellers (minority investments) to be competitive on pricing and customer experience These large sellers include Cloudtail/Appario for Amazon,” analysts at Bernstein had noted.
“Without the ability to operate and fully own a 1P business, Amazon instead has turned to taking minority stakes in local offline retailers — More (49% stake) and Shoppers Stop (5%).”
Analysts estimate that the country’s e-commerce market could grow at a 27% compound annual growth rate (CAGR) to become a $133-billion market by 2025. On September 30, the Indian government even launched the open network for digital commerce (ONDC) platform — its very own e-commerce initiative to bring smaller sellers online.