Just over a year since its launch, Amazon India has reached the $1 billion sales target, but so have its chief competitors. Big-ticket communication plans and constantly evolving customer strategy is keeping the ecommerce behemoth battle-ready
When this issue of Forbes India reaches you, Diwali will barely be a week away. But for millions of consumers across India, the celebrations began much earlier, over a month ago in fact, with the biggest deals, delicious bargains, competitive prices and the most convenient of all shopping—from home.
The autumn-winter festive period has seen major ecommerce industry players come forward and fire on all cylinders. Flipkart, Snapdeal, Jabong and more have saturated every media vehicle announcing too-good-to-be-true offers. Flipkart’s ‘Big Billion Day’ on October 6 was pitted against Snapdeal’s enthusiastic ‘Bachate Raho’ campaign and Amazon’s ‘Online Shopping Dhamaka’.
As Arvind Singhal, chairman of retail consulting firm Technopak Advisors, puts it, October will be the tipping point for online retail in India. “With the collective impact of promotion and advertising by all major players, the Indian e-tailing space will see a whole new wave of first-time shoppers coming online during the festive months.”
Yet, the youngest player on the block, Amazon India, has little to fear, says Amit Agarwal, vice-president and country manager for the global online marketplace. “We are extremely focussed on the customer and spend very little time paying attention to competitors. Our approach is to look at the three dimensions we believe in: How to expand selection, make that available for immediate shipment and how to widen our network and reach throughout the country,” says Agarwal.
THREE-WAY TUSSLE
In the 16 months that it has spent in the Indian market since its launch in June 2013, has Amazon readied itself for the onslaught of competition?
Absolutely, feels Agarwal. And he has good reason to be upbeat. In just over a year of its operations, Amazon India claims to have sold $1 billion worth of products. But that’s just the beginning. “We have reset our target much higher and are already on our way to figure out how we can get there. It’s been a massive momentum for us so far,” he says. (In March this year, Flipkart announced that goods worth over $1 billion had been sold through its online portal. Snapdeal also crossed the $1-billion mark in sales early this fiscal.)
“For a new player (Amazon) to enter the market and within a year-and-a-half, hit a billion in sales is big. The message is clear that it is not just here to stay, but also definitely looking at the number one position,” says Ashish Jhalani, founder, eTailing India, a consultancy firm.
The company made its intentions amply clear when Jeff Bezos, founder and CEO of Amazon.com, arrived in India last month. Bezos’s whirlwind trip included meetings with the heads of ministries and industry bodies to discuss the ecommerce environment in India and the roadmap ahead for Amazon in the country. Nothing, however, captured the public eye quite as much as Bezos on top of a truck with Agarwal, flashing a $2 billion cheque as large as the windshield and reaffirming the single largest investment by an individual company in the nascent $3.1 billion Indian ecommerce industry (according to a report by Hong Kong-based brokerage firm CLSA).
Amazon India’s advertising blitz comes at a time when the intensity of competition has peaked and a three-way tussle for the top slot has emerged over the last few months. A day before the company announced the $2 billion investment this July, India’s largest online retailer Flipkart said it had raised fresh capital of $1 billion. In a month’s time, Snapdeal roped in Ratan Tata, chairman emeritus of Tata Sons, as its investor for an undisclosed amount.
But experts feel Amazon’s strategy to go all-out in India is more proactive than reactive. “For Amazon, India is not a patchwork of strategy from any other country in the world. Its India strategy has been endorsed directly by the top management and Bezos with a $2 billion investment. It is not about reacting to competition; it is about saying that we take India as a good opportunity for ecommerce, and we have the right resources—whether it is people, or commitment from the headquarters, or financials—to move ahead,” says Singhal of Technopak.
PUSH FOR PROMOTIONS
All this has been made possible through the company’s significant investments in its back-end infrastructure, upgrading its delivery network, including own logistics and partners. With its seven ‘fulfilment centres’ across India, Amazon lures sellers by managing their entire purchase value chain, including warehousing, logistics, packaging and customer services based on a pay-as-you-go model.
(This story appears in the 31 October, 2014 issue of Forbes India. To visit our Archives, click here.)