Amazon is strengthening its partnerships in the Indian market, with the sole purpose of complying with the government regulations. There is a stipulation that on the e-commerce platforms, no single entity can contribute to sales of over 25% of the gross revenue. Amazon, therefore, is creating partnerships where it makes an investment giving it the leverage to control the inventories and deliveries and to ensure that the overall operations are fully monitored.
Information has just been received that one such firm, Appario Retail Pvt. Ltd., Delhi, has received funding to the extent of Rs 140 crores ($21.85 million). Appario is a subsidiary of Frontizo Business Services Pvt. Ltd., the JV between Amazon and Ashok Patni, who is one of the co-founders of Patni Computer Systems.
The amount appears to have been transferred in two tranches; Rs 40 crores in August and the remaining Rs 100 crores in November. Though there is no official confirmation from either Amazon or Patni, these figures have been cited in the reports filed by the company with the Registrar of Companies.
Frontizo Business Services is a joint venture with stakes being held by Zodiac Wealth Advisors, a Patni family owned investment arm, Amazon and Zaffre Investments of 51%, 48% and 1% respectively. Appario Retail is a subsidiary firm of this JV and is basically involved in wholesale and retail commerce and acting as resellers, distributors and stockists for goods, services and merchandise.
Interestingly, Amazon has another such JV called Cloudtail, in which the other partner is Catamaran Ventures, the investment arm floated by Narayana Murthy of Infosys fame.
Through these joint ventures, it is being reported that Amazon is able to exercise better control over inventories and on the sellers on its platform and is able to achieve better margins, besides being compliant with the regulations as mentioned earlier. It may be pertinent to note that Amazon has no such issues in its home country, the US, where, it directly accounts for around 60% of the sales on its site.