Amazon India is busy preparing for its annual Prime Day sale. Usually a July event, this year, the e-commerce giant’s big sale day is going to take place in the first week of August, courtesy a Covid-induced delay. And to push the envelope, one of Amazon India’s two top sellers, Appario Retail, is securing some exclusivity.
Appario, which operates in the electronics and accessories category for popular brands like BoAt and Sennheiser, shot an email to handpicked third-party suppliers on 10 June. It sought to lay the groundwork for product launches exclusive to Appario, demanding that sellers exclusively retail these products through Appario for at least 30 days from the launch date.
Appario’s move is a curious one because exclusivity on e-commerce platforms is a contentious issue. In fact, the Indian commerce ministry’s regulation regulation Ministry of Commerce and Industry Review of the policy on FDI in e-commerce Read more on Foreign Direct Investment (FDI), which came into effect in February 2019, explicitly bar e-commerce platforms from exclusivity agreements. According to it:
- E-commerce marketplaces cannot mandate sellers to sell exclusively on their platforms
- E-commerce firms cannot exercise ownership or control over the inventory i.e the goods sold on platforms
This effectively prohibits Amazon and Walmart-owned Flipkart from striking exclusivity deals directly with sellers. Instead, what seems to have happened is that the onus of exclusivity has shifted downstream—from Amazon India to its preferred sellers.
According to a former Appario executive, nearly 80-90% of inventory on Amazon is sold through Appario and Cloudtail India—which sells products of consumer brands like Pampers and Dettol. They declined to be named as they aren’t authorised to speak to the media.
Both sellers—Appario and Cloudtail—are joint ventures of Amazon Asia Pacific Holdings with Ashok Patni Group and Infosys co-founder Narayana Murthy’s Catamaran Ventures, respectively. Neither, however, is considered an Amazon group entity as Amazon Asia Pacific Holdings controls less than 25% of each company. Not only does this make them eligible to hold inventory and sell on the site, they are also seemingly exempt from the exclusivity rules. Appario and Amazon did not respond to questions from The Ken.
Exclusivity is a two-pronged weapon for e-commerce players. It drives traffic to the platform while holding competition off. For businesses which have been badly affected by the pandemic, it could prove crucial.
In May, when India eased the nationwide lockdown it imposed due to the pandemic, allowing e-commerce players to resume operations across categories, Amazon India didn’t rebound the way it had hoped to.