Amazon plans to delist large seller Appario Retail, in which it maintains a stake, from the marketplace, the two said Monday, a year after ending ties for another large seller Cloudtail following allegations from retailers that some sellers received preferential treatment.
Amazon and Patni Group-owned Zodiac said in a statement that they have agreed to renew their joint venture, called Frontizo Business Services, but have decided that Appario Retail will “cease to be a seller” on Amazon India within the next 12 months.
“The partners will continue to explore new business opportunities, including helping businesses across India to scale up their online presence,” an Amazon spokesperson in India told TechCrunch in a statement.
Amazon did not say why it was delisting Appario, but the move follows a growing scrutiny on its owned sellers. India’s antitrust body launched raids on Appario and Cloudtail earlier this year following accusations of competition law violations, Reuters reported in April.
A Reuters investigation last year showed that Amazon had given preferential treatment for years to a small group of sellers on its platform and used them to bypass Indian laws. The outlet’s investigation also showed that Amazon had for years helped these sellers with discounted fees.
The investigation found that about 35 of Amazon’s more than 400,000 sellers in India in 2019 accounted for around two-thirds of sales on its India website. Of that figure, two sellers, Cloudtail and Appario, contributed 35% of the platform’s sales.
India’s Supreme Court last year ruled that Amazon and Walmart-owned Flipkart must face antitrust investigations ordered against them in the country.
The Indian watchdog — the Competition Commission of India — ordered an investigation into the firms in 2020 for allegedly promoting select sellers (those in which they own a stake) on their e-commerce platforms and using business practices that stifle competition.
Long-standing laws in India restrict Amazon and other e-commerce firms from holding inventory or selling items directly to consumers. To bypass this, firms have operated through a maze of joint ventures with local companies that operate as inventory-holding firms.
India got around to fixing this loophole in late 2018 in a move that was widely seen as the biggest blowback to the American firm in the country at the time. Amazon and Walmart-owned Flipkart scrambled to delist hundreds of thousands of items from their stores and made their investments in affiliated firms way more indirectly.
In a scathing report in August, Indian newspaper The Economic Times found that a group of new sellers run by former executives of Cloudtail and Appario have mushroomed in the country and are listed on the Amazon marketplace.
India is a key overseas market for Amazon, which has invested over $6.5 billion in the South Asian market. But it continues to lag its chief rival Flipkart in the country on several metrics and is struggling to make inroads in smaller Indian cities and towns, according to a report by investment firm Sanford C. Bernstein.