In a first occurrence of its kind, Cloudtail India, a vendor on Amazon’s India e-commerce platform has delayed payments to its suppliers, as per a report in the Economic Times. Cloudtail is one of the largest vendors on Amazon and considered one of the largest online sellers. The ownership of Cloudtail India is with Prione Business Services which has 76% equity held by Catamaran Ventures and 24% by Amazon. Catamaran is the firm floated by N R Narayana Murthy, founder of Infosys.
Cloudtail sells a large number of items on the Amazon site and has posted a revenue of ₹8,945 crore for the financial year 2018-19. The company has been maintaining an impeccable record, as far as payments to its vendors are concerned, until now. The payments are normally out by the 21st day of the supplies.
The COVID-19 pandemic and the lockdown has meant there is virtually no sales on Amazon except some essentials which are also not being fully serviced due to supply chain issues. This has completely plugged the inflows for Cloudtail and it is now passing on the burden to its suppliers. The Amazon seller has now addressed an email to its vendors on the issue and has informed them that there could be delays in the release of payments against their supplies.
The company says, “We are actively working with vendors, employees, marketplaces, banks and regulators to get through these testing times.” Now this can mean a lot of things. The promoters could bring in some unsecured loans to tide over the situation or that the company could avail loans from the banks to pay off the vendors. But Cloudtail says once the lockdown is lifted, things could quickly improve. As explained elsewhere, the expectation among the key e-commerce players is that there will be a surge in orders once the lockdown is lifted. Actually, they had started gearing themselves up when the government first said e-commerce firms can start selling all non-essential goods too after April 20, once the lockdown restrictions are eased. However, within a couple of days, the government reversed the decision and said only essential goods can be sold.
It may be pertinent to recall that Cloudtail, in which Amazon held a much higher stake of 49%, has had to rework the holding pattern to comply with the FDI regulations for e-commerce firms.