THE AMAZON EFFECT
Domestic players apart, overseas online retail giants like Amazon and eBay too are eyeing a share of this pie. Amazon, which entered India three years ago, is not only committing huge investments (founder Jeff Bezos announced a $3 billion, or over Rs 20,000 crore, infusion in June this year), it is also building a strong backend infrastructure and ensuring quicker product delivery. By January 2016, the company had overtaken Snapdeal as the country’s second largest online retailer (Flipkart is reportedly the largest). In fact, in 201516, the company, which earns from seller commissions, advertisement revenues and sales of its Kindle ereader, grew sixfold over the previous fiscal. The portal was the mostvisited commerce site in the country and also had the fastest growing shopping app among all ecommerce companies in 2015.
“We are at a very early stage in the life cycle of ecommerce in India, and very early in Amazon’s life cycle in India,” says Amit Agarwal, MD, Amazon India. “We have a very longterm perspective of what we want to do and what we want to achieve. We want to transform how India buys and sells, and in that process, do our little bit in transforming people’s lives.”
Agarwal believes his company is today India’s largest online store, with over 55 million products. It has 1.3 billion products at its fulfilment centres (industry jargon for warehouses) ready to be shipped out. “This is the largest selection by order of magnitude and we are very excited about it,” says Agarwal. For low prices, Amazon focuses on the simple principle it follows globally—lower operations costs for sellers. The company owns 21 fulfilment centres in 10 states. In July this year, it opened its largest centre in Sonepat, Haryana, spread across 200,000 sq. ft with a capacity of over 800,000 cu. ft.
Meanwhile, Flipkart launched pickup stores last year to allow customers to pick up delivery parcels at a convenient time, and has plans to launch 20 such centres in 10plus cities across India. It has its largest warehouse yet on the outskirts of Hyderabad, a 220,000 sq. ft tract of land with a storage capacity of almost 600,000 cu. ft. The automated centre helps it expand operations, serve customers better, and also creates 17,000 jobs directly and indirectly in the district. Its logistics arm, EKart, has also tied up with Mumbai’s dabbawallas for better reach.
Snapdeal, which offers its portal in 10 Indian regional languages, has invested $300 million (over Rs 2,000 crore) over the past 18 months to strengthen its logistics and supply chain. It has 63 fulfilment centres across 25 cities, and has opened ‘integrated onetouch logistics centres’ in the top 10 Indian cities. “We have strengthened our flagship Snapdeal Plus (SD+) programme, which screens product quality and packaging, while having endtoend visibility on all products shipped through our centres,” says a company spokesperson, adding that 80 per cent of orders are fulfilled through these SD+ facilities.
With the new discount norms in place, how much more challenging has it become for etailers to win over buyers? Amazon’s Agarwal is unfazed. “When we have the triple effect of lower costs, higher sales and lower defects, you make more absolute rupees per sale,” he says. “This