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How Amazon Travelled 15,000km Across India To Engage With 10,000 Sellers

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How Amazon Travelled 15,000km Across India To Engage With 10,000 Sellers

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The gains by Amazon, which launched in India less than three years ago, follow aggressive investing in its local unit. It is not surprising that analysts are predicting that Amazon will soon be number one.

 

Ecommerce giant Amazon is expected to announce its second quarter results on July 28th and they have already hinted that it will break all expectations.

 

Two days before the numbers are revealed, we take a look at how Amazon India’s online commerce business has displaced its India-born rivals.

 

Amazon became India’s second-largest online marketplace by shipments in March 2016, industry estimates show. Amazon dislodged Snapdeal to become the only major player to increase share from a year ago. Amazon India’s unit market share surged to an estimated 21-24% from 14%. Although at least one recent estimate pegs Flipkart and Snapdeal ahead of Amazon India by sales.

 

Two months later in May, Amazon’s app got 1.92 million downloads, while Flipkart had 1.72 million, according to San Francisco-based app intelligence firm App Annie.

 

Data from London-based analytics provider Similarweb shows Amazon’s desktop traffic at 88.5 million, and Flipkart’s at 66.4 million, in May. On the mobile site, too, Flipkart was behind (46.8 million); Amazon got 82.8 million.

 

The gains by Amazon, which launched in India a little less than three years ago, follow aggressive investing in its local unit. To show just how much money Amazon was ready to invest in India, in September 2015, Jeff Bezos flew to Bengaluru, arriving one day after Flipkart had closed a $1 billion round of financing.

 

He posed on a delivery truck outside Amazon’s Bengaluru headquarters and handed a $2 billion mock check to his India-head. The message was clear: He would spend whatever it took to win. By some estimates the company is spending nearly $25 million a month in India already.
 
JEFF BEZOS INDIA
 

However, one front where Amazon seems to stand apart from its home-grown rivals is the relationship it has built with its sellers.

 

Just last month, Flipkart faced friction from its sellers as a sellers’ union protested by, among other things, creating a Twitter hashtag #SellersQuitFlipkart because of a unilateral change in its commission policy.

 

A recent report shows that Amazon has become the favourite for those choosing to sell online. Amazon followed by Flipkart and Snapdeal were the most preferred ecommerce websites among sellers, with highest top of the mind recall.

 

The findings were from a Nielsen study for the January-March quarter, which surveyed 1,184 online sellers.

 

If a preference by sellers wasn’t enough, Amazon India has on July 14, inaugurated its largest fulfilment centre situated in Sonipat, Haryana, some 50 kms from New Delhi.

 

The new fulfilment centre of about 200,000 square feet would help the e-tailer to fulfil orders from Delhi and surrounding areas of Haryana within 24 hours, said Akhil Saxena, vice president, customer fulfilment centres to Economic Times.

 

With the inauguration of the Sonipat centre, Amazon now boasts of 22 such large-scale warehouses across ten Indian states with five more coming up by October this year.

 

What sets Amazon India apart is the dual strategy that they have pursued to enter the Indian market. According to an article by Professor Vijay Govindarajan in Harvard Business Review, Amazon since 2013 has worked to create a program to recruit an army of suppliers.

 

Amazon launched mobile Chai Carts or `tea-carts’ on the streets of Tier 2 and Tier 3 cities, towns with the aim of serving refreshments to small-business owners while teaching them the virtues of e-commerce.

 

The Chai Cart team reportedly traveled more than 9,400 miles (15,127 km) across 31 cities and engaged with more than 10,000 sellers.

 

To help these sellers get online quickly, Amazon launched ‘Tatkal’ services earlier this year, a self-described “studio on wheels” that provides a suite of launch services, such as registration, imaging, cataloging, and sales training.

 

The second part of its strategy according to Govindarajan is the development of its fulfillment platform by introducing Easy Ship and Seller Flex. With the former, Amazon couriers pick up packaged goods from a seller’s place of business and deliver them to consumers.

 

With the latter, vendors designate a section of their own warehouses for products to be sold on Amazon.in, and Amazon coordinates the delivery logistics. This approach has benefited Amazon by speeding up delivery of some products.

 

Amazon has also partnered with India Post and offers delivery via 155,000 post offices. It has almost a million products available for next-day delivery.

 

Amazon announced a massive top-up for its India investment of $3 billion in June this year, a month after Flipkart‘s valuation was marked down by four mutual fund investors.

 

Amazon’s investment in India seems justifiable with projections of e-Commerce revenue expected to jump from $30 billion in 2016 to $120 billion in 2020, growing at an annual rate of 51%, (the highest in the world), according to a joint ASSOCHAM-Forrester study paper.

 

It is not surprising that analysts are increasingly predicting that the Amazon of India will be… Amazon.

 

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