One in five of India’s approximately 600 million internet users is an active online buyer, according to market researcher and consultancy Redseer Consulting. New rules introduced by India on December 26—known as Press Note 2 or PN2—placed tougher restrictions on the way online marketplaces or their parent ecommerce companies could operate in the country. For instance, the marketplace could source no more than 25 percent of its inventory from a seller linked to it.
Amazon was most hit by this, and had to restructure its holding in Cloudtail, its largest seller. It also had to pull an estimated half a million products from its site, according to market researcher Market Pulse.Similarly, Amazon had to pull products from another of its sellers, Appario Retail, and also those of Shoppers Stop in which it holds a 5 percent stake. Amazon will reduce its holding in Appario as well, a joint venture (JV) with Patni Group, The Economic Times wrote on February 6.
Cloudtail, operated via a 49:51 JV between Amazon and Catamaran Ventures, had to stop selling on Amazon India from February 1-6. Amazon has since reduced its holding to 24 percent while Catamaran raised its ownership in the seller’s parent, Prione Business Services.
(This story appears in the 01 March, 2019 issue of Forbes India. To visit our Archives, click here.)