Amazon is looking to create another seller like Cloudtail in India. According to a report in the Economic Times, Amazon is in talks with family officers of prominent business families to create merchant entities that will act as sellers on Amazon India.
For this, Amazon is talking to Burman Family Holdings, the strategic investment arm of the Burman family which owns FMCG major Dabur and Infosys co-founder Kris Gopalakrishnan's family office, sources have told ET.
A deal could be inked in a few months. However, while Dabur declined to comment, Kris Gopalkrishnan has denied being in any discussions with Amazon.
The joint venture that Amazon plans on inking will be similar to its largest seller Cloudtail India, which is a 100% owned subsidiary of Prione Business Services, a joint venture of Infosys co-founder Narayana Murthy's Catamaran Ventures and Amazon Asia, reports ET.
Cloudtail was created in 2014 and enjoys preferential rates and fees on Amazon India. It is also the only Platinum seller on the platform.
According to the report, while the exact structure of the deal is unknown, the announcement of the venture is a fortnight to a month away. The announcement is likely to come once discussions on GST settle down.
Analysts say that by forming a captive selling entity, Amazon will be able to control inventory and customer experience better.
Satish Meena, senior forecast analyst at Forrester Research told ET that Cloudtail has been doing well and these ventures help Amazon comply with the DIPP norms and exercise greater control over inventory, manage customer experience and comply with the regulations of GST for tax collection at source.
She added that this is a better investment opportunity for family offices as compared to investing in a marketplace directly. The returns are better this way.
Cloudtail India reported a 300% increase in revenues to Rs 4,591 crore in FY16 while losses fell marginally to Rs 30.2 crore from Rs 31 crore the previous year, according to documents filed with the Registrar of Companies.