Amazon India's largest sellers -- Cloudtail and Appario -- are seeking higher margins from brands and distributors, reports The Economic Times. “They are seeking an 18-20 percent hike in margins from current levels,” a source told the paper.
The e-commerce giant is a joint venture partner in both Cloudtail and Appario, and recently lowered its stake in companies to meet foreign direct investment (FDI) norms.
Moneycontrol could not independently verify the story.
Demand for higher margins began two to three months ago, two executives from a consumer electronics firm told the paper. Negotiations with FMCG and fashions have gathered pace in recent weeks, the report said.
Negotiation on margins have taken into account logistics costs and marketplace commissions to Amazon India, given that the company is not giving preference to any sellers, the report said.
“The entire focus of Cloudtail and Appario is now on profitability and viability as compared to revenue and building market share (that was the focus prior to the change in FDI rules),” a source told the publication.
The two sellers have asked for a 20-21 percent margin on audio products, as against 17 percent earlier, the report said. For television products, Cloudtail and Appario are seeking a margin of 10-11 percent, up from nine percent currently.
Cloudtail is a joint venture between R Narayana Murthy’s Catamaran Ventures and Amazon Asia. The e-commerce company had to lower its stake to 24 percent from 49 percent to keep sellers on its platform.
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