Amit Agarwal, Vice President and Country Manager at Amazon India, just got a boost from Founder Jeff Bezos, when the latter publicly announced an investment of $3 billion into the company’s India operations. This comes post a series of reports that suggest Amazon has surged ahead of Snapdeal to take the second spot behind Flipkart. However, Amit told YourStory that the company has wrested leadership position already. The capital infusion should also been seen on the backdrop of rumours of Alibaba setting up shop in India. The Chinese giant has already made investments in India, in firms like Snapdeal and Paytm. Indian corporate biggies are not far behind either, The Tata Group and Reliance Industries are just two conglomerates that have launched their online retail operations in recent months.
The $3 billion announcement is a clear flexing of muscles by Amazon,, showing it means business in India and is willing to spend big bucks to win the market. In a conversation with YourStory, Amit said that overall strategies will not change. The focus will be on doing what has worked for them so far, better. Edited excerpts:
YS You are closing in on the leadership position.
Amit From our vantage point, we are already the leader.
YS If you had to pick one reason for the success you have seen, what would it be?
Amit I would share what Amazon India has always focussed upon. I wouldn’t judge it as right or wrong. It has just been our approach all along. Sometimes we fool ourselves by trying to drive judgement based on short-term performances. But the one thing that we’ve been focussing upon is what really matters to our customers. The three things we found out that matter the most to our customers are access to selection, getting comparatively low prices on that selection and making sure that they get their products reliably. Those continue to be our areas of focus, not only in India but globally.
After three years (of launching in India), we are India’s biggest online store for buying products. More than 1.3 million products are in stock and are ready to be immediately shipped to buyers. We’ve built products like EasyShip etc. A lot of these have been built to help sellers to get online and to get rid of their headaches like warehousing, picking, packing, delivery, logistics, and customer service. All of these help reduce their cost, remove defects from the system and improve their sales. When that happens smart sellers will pour that back into low prices and that’s the only sustainable way to ensure everyday low prices. Finally, we have built India’s largest guaranteed delivery network. More than 150 cities are eligible for two-day guaranteed delivery. We also have morning delivery, scheduled delivery, two-hour delivery (in Bangalore) for everyday essentials.
If you look at traffic, we are the most visited e-commerce site on web and mobile. In 2016, we are the most downloaded shopping app. We have grown 250 percent year-on-year. In Q4 we sold more than the entire year, last year. In this year’s Q1, we have grown by 150 percent, year-on-year, despite having a great growth rate last year. We continue to see that strong momentum and that hasn’t slowed down at all. We have also been recognised as the most preferred platform for sellers and most trusted online shopping platform for the last two years. Across the board, it’s very heartening to see the progress in the core customer experience pillars and it is translating into the core leadership attributes that you would measure.
YS How is Amazon Now (the hyperlocal grocery delivery service) doing in Bengaluru?
Amit It’s doing really well. We have two-hour delivery guarantees to deliver daily household supplies. Currently, we have over 6,000 products available to be delivered within two hours. Our operations has multiplied by almost three times in the past three months. We are expecting to expand to other pincodes in Bengaluru and to other cities.
YS What kind of startups will interest you for investments and acquisitions?
Amit We have been following the organic strategy and it’s been working for us and there isn’t any particular reason for us to change that. We are always looking for visionary entrepreneurs and companies to delight customers and will align with our company’s core idea.
YS Coming back to the $3 billion war chest, is it a game of who has the more capital to spend?
Amit The truth is that customers will shop on your website only till the point they find a better experience using another shopping website. We put all our efforts and investments in the things that matter to the customer, which are those three pillars that I pointed out earlier. I think it’s all about execution.
YS So, money is important for execution, right?
Amit I would say it is an enabler.
YS There’s been a lot of talk about Alibaba investing in India. So, do you think India will become an Amazon vs Alibaba battleground?
Amit It’s very very early for e-commerce in India and it is very early for Amazon in India. It is a very large market and there will be many winners. Our sole focus is to delight customers and we have a long term outlook. You should expect us to invest aggressively in the market. In view of the competition, in all countries where Amazon is present we have competition. So, India is no different.
YS What’s the update on Amazon business, the wholesale arm?
Amit Amazon Business, primarily in Bengaluru, is a service where small and medium businesses to buy their supplies from us. Now, there are more than 10,000 members shopping in Amazon Business. Right now we are focused on Bengaluru.
YS So, you said how you focussed on the three pillars. Was there any part of your journey when you had to rethink your strategy or when the Indian market surprised you?
Amit At the highest level, you can see that consumers and sellers in India are the same as those around the world. Consumers in India also like selection options, low prices and fast, reliable delivery and sellers like fair, transparent mode of transactions. So, things that we’ve been doing for the last 20 years can still be followed in India. But the one thing in which the Indian market surprised me was that how sophisticated and discerning the Indian consumer-seller environment is even at an early age of evolution of e-commerce in India. Sellers are new to online retailing, and somewhere new to even organised retailing. Consumers were also new to online retailing, but the speed at which they’ve gotten used to the system is great and exciting. This has become a national phenomenon.
In Amazon, more than 65 percent of our units come outside tier-1 cities. It also says as to how mobile has become a useful driver of traffic. More than 75 percent of our traffic comes from mobile. More than half of our sales comes from mobile. So, mobile has become a very important channel for us to increase sales and improve traffic.
YS Among the pillars, you mentioned fast, reliable delivery. How are you going to improve your logistics to reach out to more number of cities?
Amit We have more than 21 fulfilment centres that are Amazon owned in more than 10 states with more than 5 million cubic feet of space. In addition we have 50 fulfilment centres that are seller owned that plug into the same network. We are adding these at a rate of one or two a week. This is our rate of expansion; I guess we added three last week.
YS Can we expect another Jeff Bezos India visit? His last visit was close to the $2 billion announcement.
Amit (laughs) I guess you would have to send this question to him. I don’t think he will come and hand over another cheque of $3 billion.