No dearth of demand, more than 50% customers to raise festive purchases this year: Amazon India

The e-commerce major is also ramping up its logistics and delivery network in expectation of a demand spike

At a time when the e-commerce sector is fighting weak consumer demand, Amazon’s India arm said that it was not seeing any dearth of demand ahead of the festive season and is preparing to cater to more sales than the previous edition.

“We haven't seen any slowdown of the demand. India is a huge market that is constantly growing and there is no dearth of demand. In fact, we have always been trying to catch up to the demand,” said Saurabh Srivastava, Vice President, Amazon India.

“This year’s festive sales will be much bigger than last year. In a survey, more than 50 percent of customers said that they actually plan to increase their online spending during this festive season,” he added.

The e-commerce major is also ramping up its logistics and delivery network in expectation of a demand spike. It has added more than 100,000 job opportunities across its operations network. These include direct and indirect jobs across the country in cities such as Mumbai, Delhi, Pune, Bangalore, Hyderabad, Kolkata, Lucknow, and Chennai, among others.

Ahead of the Amazon Great Indian Festival, which will kick off on October 8 (with early access to Prime customers starting October 7), Amazon India said that it has already onboarded the majority of these new hires into its existing network. The new hires will pick, pack, ship, and deliver customer orders.

“The planning and build-up for the festive sales starts at the beginning of a year. And the plans for new fulfilment infrastructure are done almost three years in advance,” said Srivastava.

The upcoming edition of festive sales will also be the first time when the D2C brands will be able to use Amazon’s delivery network even for orders received on other e-commerce platforms. The service, which Amazon refers to as multi-channel fulfilment was launched last month to compete with Ekart, the third-party logistics arm of rival e-commerce major Flipkart.

“Amazon has been a destination for new D2C brands to build their business — from Mamaearth to Yoga Bar and boAt, really large consumer brands have been created on Amazon. But one request they have had is access to Amazon's fulfilment network even when they sell on other platforms such as their own websites. We launched multi-channel fulfilment last month and it is being adopted with a lot of excitement,” said Srivastava.

Robust ad growth

Small sellers on e-commerce platforms such as Flipkart, Amazon and Meesho are looking to spend 75 percent more than they did in the year on online advertising to drive sales in the festival season, management consulting firm Redseer said in a report recently. As a result, increasing ad revenues are expected to drive better margins for e-commerce platforms during the festival sales.

“Our advertisement business continues to be very strong, very robust. What is happening is that customers are being very distinctive about what they want. They're very specific about what they want. Brands are actually leveraging this sharpening of customer interest,” said Srivastava.

“Our focus is how they should make the creatives, which customer segments should they target and how they can get a good return on investment on the ads. From large international brands to small artisans, we have 14 lakh sellers on Amazon today and they have very different needs and budgets for ads,” he added.

Over the years, advertisements have gradually become a significant portion of e-commerce marketplaces’ revenue. Especially in a country like India where most customers still don’t want to pay extra for the convenience of online shopping, e-commerce companies look to make up for the lost revenue through ad placements.

Subscription race

In what appears to be yet another front of rivalry with the Walmart-owned marketplace, Amazon is now rolling out a new variant of its Prime membership programme for Android users in India. Titled Prime Shopping Edition, it is available to users at Rs 399 per year and offers free shipping, one-day deliveries and other shopping-related benefits that Amazon Prime users get.

Prime Video, Music, Reading, Gaming and other entertainment offerings will not be available as a part of this offer. The Seattle-based e-commerce giant sells Amazon Prime, which comes bundled with entertainment offerings for Rs 1,499 or sometimes even at Rs 999 during offers.

“Our belief is that once they see and experience this shopping benefit, they would love to become a full member and enjoy all the other things. We don’t want them to think that it's all or nothing. We want them to experience the shopping benefits and we believe that they will upgrade to full membership later,” said Srivastava.

“What’s very exciting for us is that Prime is being adopted all across India, and not just in metro cities. We're seeing a lot of Prime customer sign-ups from tier two and tier three cities… and they're probably doing this because the wide assortment of products is important for them. They can't find it elsewhere,” he added.