Cloudtail’s commission to Amazon more than doubles in two years

Cloudtail, one of the largest sellers on the Amazon India platform, has seen its fee or commission to Amazon India increase to more than double in the last two years in terms of the percentage of its revenue it pays to sell on the platform.

The company, which is a joint-venture between Infosys co-founder Narayana Murthy's Catamaran Ventures and Amazon, paid nearly 9 per cent of its revenue at Rs 980 crore as platform selling fee for the year ended March 2020 compared to a little over 4  per cent in the year ended March 2018 at Rs 315 crore. This component was under 6 per cent in the 2019 financial year at around 561 crore, according to the annual report of the company. For the financial year 2020, Cloudtail reported a revenue of Rs 11,413 crore.

This is a fee that Cloudtail has largely paid to Amazon India for selling its goods through its marketplace. Though it is attempting to sell on other marketplaces also, Cloudtail’s core business comes from Amazon India.

While the jump in commission is said to be significant, it is still less than the average commission of around 25 per cent which independent third-party sellers pay to sell goods online.

This has been one of the issues raised by smaller sellers who accuse online platforms of preferential treatments to select large sellers who move a significant part of their volumes. E-commerce companies have maintained their policies are the same for all their sellers. They, however, have performance-linked incentives for their merchants.

Sellers and traders have raised this as an issue with the government. As a result, over the last two years, the government has also increased its scrutiny of large sellers closely linked with e-commerce companies.