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Amazon touts India model as formula for success

07 April 2016

India has found positive mention in Amazon Inc founder and chief executive Jeff Bezos' annual letter to shareholders, underlining the growing importance of India within the global business of the company.

''India is another example of how we globalise an offering like the marketplace through customer obsession and a passion for invention,'' says Bezos in the letter filed with the US Securities and Exchange Commission. Amazon is listed on Nasdaq and commands a market capitalisation of $276 billion.

The letter highlights the fact that the company launched initiatives such as Amazon Chai Cart and Amazon Tatkal to get more local sellers on board its marketplace in India. Interestingly, the letter hints at a strategy wherein initiatives experimented in India could soon be replicated in other markets.

The Amazon Tatkal initiative, which enables small businesses to get online in less than 60 minutes, was launched less than a month ago and has reached over 25 cities. The service was launched after Amazon found that ''there was a lot of interest in selling online, but sellers struggled with the belief that the process was time-consuming, tedious and complex'', says the letter.

The Chai Cart programme that was launched last year travelled through various cities on three-wheeled mobile carts to make small business owners aware about selling their wares online. ''In a period of four months, the team travelled 15,280 km across 31 cities, served 37,200 cups of tea, and engaged with over 10,000 sellers,'' stated the letter.

In India, the US major competes with home-grown ecommerce players such as market leader Flipkart, Snapdeal, Paytm and Shopclues, among others. While the overall ecommerce segment is growing, the companies are yet to register profits even as sales are growing manifold.

According to the company's filings with the Registrar of Companies, its sales rose six-fold to Rs1,022 crore in the financial year 2014-15 (FY15). However, the losses also moved up to Rs 1,723 crore in FY15 from Rs321.3 crore in FY14.

A report released by Crisil in September said the gross merchandise value of e-retailers surged by 60 per cent to about Rs40,000 crore, driven by ''aggressive promotions and increasing trust in - and convenience of - online shopping''.

Meanwhile, the head of Amazon Inc also highlighted the fact that the company has launched a programme in India called 'Seller Flex' to combine its logistics capabilities with the sellers' selection at the local level. The company has launched 25 operational Seller Flex sites across 10 cities, he said.

Soon, Amazon will start an availability zone - a simple storage service - in India under the Amazon Web Services, which is reaching $10 billion in annual sales. (See: Amazon doubles authorised cap, steals march on rivals).

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