FMCG sales have fallen significantly on Amazon India after brands including Nestle, Dabur and HUL were asked to switch to new seller Rocket Kommerce from Cloudtail, two sources aware of the matter told ET.
Sources estimate that the fall in sales could be in the range of 30-40%.
Cloudtail was the biggest seller on Amazon and the e-retailer shut it after acquiring a 100% stake in its parent firm Prione. Amazon was forced to shut the seller as existing norms do not allow an entity running an online marketplace and its group companies to own equity in any seller on the platform or control its inventory.
The biggest hurdle from the transition to Rocket Kommerce has been the brands’ inability to provide credit to the new seller.
Most business-to-business (B2B) transactions are credit-based, meaning brands give sellers a few weeks’ time to pay for the goods sold.
“So, what is happening is a lot of sales are getting stuck because management at the brand level is finding it difficult to approve the credit limit,” said one source.
ET reported on March 28 that Cloudtail started distributing its sales volumes to new sellers like Cocoblue, VRP Telematics and Rocket Kommerce.
Finance teams at leading fast-moving consumer goods brands say the new entities lack the required heft in dealing with high-volume transactions, making them wary about issuing credit.
“Now, Amazon does not really have a role to play in any of these sellers,” said the source. “So, brands are not willing to take any risks because there is nowhere to go for resolution. That is the reason things are becoming a bit tricky here.”
Moreover, Rocket Kommerce has allegedly delayed making payments to some brands that issued credit.
Amazon India, Rocket Kommerce, Nestle and Dabur did not respond to ET’s queries as of press time Thursday.
“ITC Limited has started working with RK World (parent company of Rocket Kommerce) in May 2022. The transition from Cloudtail to RK World is now complete and we are committed to growing business in partnership with them,” said a spokesperson.
Sellers told ET that many systems, processes and the required manpower are still not in place at the new seller, making it difficult to sell on Amazon.
“Category support service, like running a promotion or a lightning deal, or request to reduce prices was much faster at Cloudtail; it is taking a lot of time here as the tech and manpower have yet to be put in place,” one seller said.
Two sources told ET that Amazon has directed former Cloudtail employees to work with the new sellers to improve operations and handhold them during the transition. ET reported on April 25 that the company would absorb all former Cloudtail employees.
“While every seller has teething issues, Rocket Kommerce is critical since they handle the most important categories,” said one source.
Most FMCG brands have been asked to sell through Rocket Kommerce. Two sellers told ET that they had anticipated some of these challenges but expect those to get sorted out soon.
Source-https://retail.economictimes.indiatimes.com/news/e-commerce/e-tailing/fmcg-sales-fall-on-amazon-after-cloudtail-transition/92736497