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Last Updated : Mar 06, 2018 04:06 PM IST | Source: Moneycontrol.com

Amazon chief Jeff Bezos keen on winning Indian online retail market

The company's efforts, however, have not bore real fruits as Amazon is facing a tough challenge from its local rivals like Bangalore-based Flipkart Online Services Pvt.

After losing the Chinese market to Alibaba and JD.com, Jeff Bezos is being keen on winning the Indian online retail market constituting of 1.3 billion people who are developing a shopping culture.

A Bloomberg report  stated that Amazon's founder and chief has committed USD 5.5 billion for Indian operations.

To expand its reach to the rural India, Amazon has been taking several steps including setting up of a credit operation for Indians without bank accounts, building a streamlined mobile app so it doesn’t crash the cheaper phones typically used by small-town Indians and loading online stores with tens of thousands of eclectic products from the butter chicken  to instant curry paste.


The company's efforts, however, have not bore real fruits as Amazon is facing a tough challenge from its local rivals like Bangalore-based Flipkart Online Services Pvt.


The heavy spending on logistics, digital payments infrastructure and warehousing in India ballooned Amazon's international losses to more than USD 3 billionmore than USD 3 billion more than USD 3 billion in 2017 alone.

“India is complex and it’s early days in e-commerce so online retailers cannot afford to ignore either physical or virtual infrastructure,” says Gautam Chhaochharia, India head of research at UBS Group AG.

The spending on laying down the infrastaructure, however, enabled Amazon to built its own delivery network—solving the so-called last mile challenge by deploying an army of deliverymen who cut through the chaotic traffic on scooters and motorbikes.

Currently, Amazon has 41 fulfillment centers, mainly in the countryside, and created a program called I Have Space, which involves using 17,500 stores in 225 cities as mini warehouses, the report said.

The move has also led to an increase in its cutomers. The company now has 150 million registered users who can shop for 160 million items offered by 300,000 sellers.

To understand the dynamics of local market and adapt company's technology to local conditions, Amazon has partnered with neighborhood shop owners, who help customers compare products and prices online. The company has also launched a slimmed-down version of the app, called Micron, that requires less memory.

Considering payments as a big challenge for e-commerce companies in India, Amazon has multiple offers —  cash on delivery, credit, interest-free installments — for shoppers. The e-commerce giant has also created a digital lending marketplace to extend credit for small sellers, at least those deemed low-risk by machine-learning algorithms.

In April 2017, the Reserve Bank of India had gave its nod to Amazon India's license to operate a pre-paid payment instrument (PPI). The platform help customers avoid the hassle of coordinating the time of delivery with the delivery person, making it convenient for buyers.

The range of steps taken by Amazon to expand its business in India indicate that the company is set to win India despite tough challenges fro rivals.

“Rivals’ efforts only serve as reassurance that the opportunity is large,” Agarwal says. Quoting Bezos, he says it’s barely “Day One” in India. “We are here for the next 100 years.”
First Published on Mar 6, 2018 04:06 pm