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How Amazon India plans to deploy the $3 billion fresh funding

News Desk
9th Jun 2016
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After getting a commitment of an additional $3 billion in investments from Amazon Founder Jeff Bezos, Amazon India’s Managing Director Amit Agarwal says that their endeavour is to get the best shopping experience to its customers.

Amit Agarwal, Managing Director, Amazon India
Amit Agarwal, Managing Director, Amazon India

According to a report by The Economic Times, lowering costs for its sellers is a key priority for Amazon India to ensure better prices to its customers. Amazon started its Indian operations in 2013. Amit says,

One thing that Jeff said was that Amazon.in has surpassed even our most ambitious milestones. This investment is a reflection of that. Having seen a tremendous growth in India over the past three years, we are looking at the long-term opportunity, and will consider India as a key opportunity for Amazon. Our aspiration is to transform how India buys and sells.

Amit says a chunk of the investments will be used for enhancing the customer and seller experience, as they have done over the past three years. “In India, our approach has been to invest aggressively with a long-term horizon and not hesitate. In fact we have built local India first capabilities that customers need,” says Amit.

Over the last three years, Amazon’s focus has been on selection, low prices and more reliable delivery. Further, convenient payments and mobile transactions have also been a key focus for the e-commerce giant in the country.

Amit adds,

When I look at selection, our focus has been on enabling sellers, training them, bringing them online and building infrastructure for them. When we look at lowering prices, our prime area of focus has been how we lower cost of operations for sellers so that they can offer lower prices.

Additionally, Amit also explains the use of technologies like IoT (Internet of Things) which allows sellers to reduce their cost of operations. According to Amazon, if costs are going down and sales are going up, money can be used to offer lower prices, and that becomes the only sustainable way to offer low prices.

The firm is also actively looking at visionaries who are building a great experience for consumers and sellers in the country. But for Amazon India, it is sure that vast selection, low prices and fast delivery will be their market strategy to attain differentiation from their competitors in the market. Amit says, "Our deep paranoia that a customer doesn't find the best shopping experience elsewhere is core to how we approach our daily jobs."

On expansions, the company says that they are willing to deliver at every place in India wherever there is a post office. For Amazon, more than 65 percent of their sales come from non-Tier-1 cities. But having said that, Amit says that this is barely day one, with a lot of opportunity even in the larger cities. Interestingly, both Amazon and Flipkart are still not delivering in Uttar Pradesh owing to some incidents where customers misbehaved with delivery boys.

The background

It was reported this year that Amazon saw its market share (in terms of shipments) rise to over 21 percent from 14 percent, making it the only major player to increase its share from a year ago. To give a context, Flipkart slipped from 43 percent in March 2015 to 37 percent in March 2016 and Snapdeal slipped from 19 percent to 14-15 percent.

According to reports, in June 2015, Amazon India also caught up with Flipkart after overtaking Snapdeal in terms of traffic.

On Wednesday, the government was reported to be building its e-commerce platform for official procurements, called GeM or Government e-marketplace. This shows how online shopping has now become mainstream. Large corporates are also launching shopping portals. These corporates, like the Tata Group and Reliance, have been drawn in by the rapid growth of the e-commerce market in India, which is touted to grow to over Rs 2 lakh crore by December 2016.

Recently, the Tata Group launched its e-commerce platform – Tata CliQ. Others who have launched online retail portals include Aditya Birla Group, with its online fashion store abof.com, Reliance Industries, with its online fashion retail platform Ajio, and Arvind Ltd, with its omni-channel platform NNNow.com .

The $3 billion investment will certainly help Amazon in the race to win the Indian e-commerce crown, especially now that deep-pocketed industry houses have entered the arena.

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