Amazon India plans to launch new digital payments service
Amazon India indicated that it is witnessing rapid growth from its Prime membership programme amid a healthy increase in the number of new users from second and third-tier cities and towns, even as the e-commerce giant prepares to launch a new digital payments service soon in India after getting the go-ahead from the Reserve Bank of India to do so.
In an interview on Wednesday, Amazon India head Amit Agarwal said that spending from the customers’ existing base of paid Prime users has doubled between since the beginning of the year. had reported in April that Amazon’s Prime membership programme was driving 30% of all orders on its platform.
“One out of three units that are shipped by us are ordered by Prime customers—so, we’ve reached a point where we see a healthy loyalty that is allowing people to buy more and more. Just the Prime spend between Jan and May increased 100%—so our loyal base is buying more and we’re getting healthy customer inflow. If I look at the sale event in Jan vs May, it shows they’re shopping more,” said Agarwal, who was promoted to the rank of senior vice-president earlier this year. Agarwal added that 50% of orders shipped on Prime are being driven by tier-II and tier-III users.
The latest growth figures from existing Prime users is significant, as it indicates that the volume of spending from existing e-commerce users—a key metric to track the health of the broader online retail market—is growing steadily and showing signs of bouncing back, after the online retail market barely grew in 2016. Amazon India, which has now completed four years of operations, is also working on a new digital payments service, but Agarwal declined to share details on what form the service might finally take.
Amazon India, which had applied for what is called a Prepaid Payment Instrument (PPI) licence nearly a year ago, is soon expected to launch the new digital payments service that will be broader in scope than its Pay Balance service and will not be restricted to Amazon-based transactions.
“All these areas are very early in their life cycle...Our most important priority for our payment investments has been to improve the experience of customers on Amazon. In that sense, this licence allows us to provide a more cashless experience and a more convenient experience to our customers...this will allow us to move customers away from a cashbased or payment on deliverybased segment to a more prepaid digital segment. That’s our primary priority. Of course, we’ll try different experiments and then see what happens,” said Agarwal.
Agarwal said Amazon, which has committed to invest $5 billion to build out its India business, will continue to invest heavily in key areas such as infrastructure and technology, as part of a broader strategy to expand the market and tap the next 100 million users.
Currently, about 75% of Amazon India’s new customers come from lower tier cities, while 65% of its active customers are new users, Agarwal said.
“If I look at the last 4 years, almost half of our investments has been in infrastructure, which is a large amount. Infrastructure will continue to be one of our key investment areas,” said Agarwal, who has overseen Amazon’s rapid strides in India.
Reliance Communications Chairman Anil Ambani will not take any salary or commission in the current financial year, as the company is reeling under huge debt and credit downgrades. The top management of the company has also decided to defer their personal pay by 21 days till the end of this year. “Chairman, Reliance Group, Anil D Ambani voluntarily decides to draw no salary or commission from RCom in current financial year,” RCom said in a statement. The company has defaulted on some of the payments to lenders and it has received time till December for strategic restructuring plan under which it will get a sevenmonth standstill to service loans amounting to ₹45,000 crore.
Ambani has said that the debt burden will be reduced to ₹20,000 crore with two deals by September, before the December deadline given by the lenders. RCom said Aircel and Brookfield deals are targeted to close by September 30, 2017 subject to approvals and will reduce debt by nearly 60% or about ₹25,000 crore.