Cloudtail employees and its parent firm Prione Business Services, numbering 1,000-1,200, are being shifted to Amazon India and the process is likely to be completed by the end of May, a person privy to the matter told.

Prione CEO Pankaj Jathar had told company employees about the transition plan in a townhall meeting on April 12, the person said.

“We are planning to complete the transition by the end of May 2022. Specific dates of various steps to be published in the next two weeks,”  mentioned a slide used during a meeting by Pankaj Jathar, CEO,Prione Business Services.

Formalities of the onboarding process would be shared with employees through email, it said.

Cloudtail, set up in 2014 as a joint venture between Amazon and Infosys founder NR Narayana Murthy’s Catamaran Ventures, is one of the largest sellers on Amazon India.

The ecommerce marketplace was forced to trim its stake to 24% from 49% in 2019 to comply with India’s foreign direct investment (FDI) regulations for the ecommerce sector.

Now it is being close down as latest norms do not allow an entity running an online marketplace and its group companies to own equity in any of the sellers on the platform or to have control over their inventory.

Amazon is buying Catamaran Ventures’ 76% stake in Prione. The deal was recently cleared by the Competition Commission of India (CCI).

The process to onboard Prione employees has begun and Amazon has hired a third party firm, First Advantage, to conduct background checks on the employees, said the source cited above.

Prione has informed its employees that its office in Langford Town, Bengaluru, will continue to function.

Emails sent to Amazon India, Prione and First Advantage did not elicit a response till press time Sunday.

All Cloudtail employees were likely to be shifted to Amazon once the transaction between Amazon and Catamaran Ventures closes. Cloudtail employees have been working closely with Amazon. In fact, one of its previous CEOs, Sumit Sahay was an Amazon employee before joining Cloudtail. Sahay moved back to Amazon India in May last year.

Prior to the formal announcement on employee transfers, Cloudtail has been transferring the inventory and business rights to other sellers on Amazon India. VRP Telematics and Rocket Kommerce will take over a portion of Cloudtail’s business while Cocoblu Retail is taking over segments like fashion.

Cloudtail has also sent out contract termination notices to vendors who were working with the firm, saying that it was in the process of ceasing the listing and sale of products on the Amazon marketplace in “near future” and that it will stop taking purchase orders from April 18.

Besides Cloudtail, Prione houses a business-to-business (B2B) unit that onboards small and medium-sized enterprises to sell online and offers services like cataloguing the listings. This business will continue even after Amazon buys 100% in Prione, sources said. Prione has teams which work across areas like onboarding local shops and new sellers on Amazon Food, Amazon Pay and others.

“The B2B business does not ruffle feathers with any regulatory body,” said a person associated with brands selling on Amazon. “Though Prione has been an independent business entity over the years, all its business comes only from Amazon.”

The current contract for Prione joint venture is valid till May 19.

Cloudtail has been critical in Amazon’s success in India early on. Its financials indicate its scale. In FY21, Cloudtail’s revenue increased by over 45% to Rs 16,639 crore with a profit of more than Rs 182 crore.

Similar to Cloudtail, Amazon also set up Frontizo Business Services in joint venture with Patni group in 2017. While Frontizo is involved in offering customer support services to Amazon India, its subsidiary Appario Retail is also one of the famous sellers on the Amazon India marketplace. Appario Retail reported a revenue of Rs 14,628 crore in FY21 with a profit of Rs 54 crore.