Amazon.com in big drive to push sales in India
BANGALORE: Free shipping on a 100 rupee ( R16) book. Delivery times guaranteed to the minute.
These are some of the incentives the world’s biggest online retailer Amazon.com is using to entice Indians to shop on the web, a sector where growth has been stifled by payment problems, low internet usage and a challenging logistics environment.
Amazon’s investors are counting on its international business and expansion to help drive growth and support its $165 billion market value, one of the highest among US firms.
India is Amazon’s third emerging market investment after Brazil and China, and one vice- president and country manager Amit Agarwal said would take time to pay off.
Most Indians do not own a credit card, and less than half of the 152 million internet users have shopped online.
Then there are problems like India’s bad roads, the snarled bureaucracy and the petty bribery that greases business.
The potential, however, is vast.
Online retail sales in India were forecast to grow more than a hundred-fold to $76bn by 2021, from just $600 million at the end of 2012, retail consultants Technopak said.
E- tail sales in China, by comparison, are expected to grow to $650bn by 2020 from about $200bn in 2012, consultants McKinsey predict.
“A lot of invention is required to capture the potential of this market and our focus is to build this,” said Agarwal, who returned to India to head Amazon’s business after 14 years with the company in the US.
“We are going through a lot of trial and error to fix problems on the ground,” he said at Amazon’s India office in the technology hub of Bangalore.
Indians, on average, spend between $ 24 and $ 35 on an online transaction, a figure dwarfed by the $150 to $160 spent by US shoppers online for a transaction, according to data from US-based analysts comScore and Retail Decisions.
Agarwal spent two years advising Amazon’s founder, Jeff Bezos, at the company’s Seattle headquarters, and believes Amazon’s long-term strategy will work in India as it did in the US, where the com- pany ran up losses for years.
“Right now we are focused on giving customers great service and making sure they shop more,” he added, sitting behind a large desk that he brought back with him from Seattle.
Amazon’s biggest local rival is Flipkart, set up by two exAmazon employees in 2007 and which has yet to turn a profit.
Since July, Flipkart has raised $360m from investors that include South Africa’s Naspers.
It said it aims to have $1bn in sales by 2015.
Agarwal would not give any forecasts or figures, but said Amazon’s investments in India had a seven to 10-year horizon.
He said Amazon was building its own logistics network, which it could leverage when the rules changed and it could sell directly to consumers.
Indian regulations now prevent international e- tailers from making direct sales. – Reuters