Amit Agarwal, VP & Country Manager, Amazon India |

It’s a subsidiary of the world’s largest and most valuable e-retailer. But thanks to India’s regressive FDI laws, it’s not being able to fully flex its muscles in the country. In an interaction with The Dollar Business, Amit Agarwal, Country Head, Amazon India, spoke about his strategies to fight such a strong headwind

Vanita Peter D’souza | May 2015 Issue | The Dollar Business

 

TDB: How has Amazon’s experience been in India? Have you found the Indian buyer any different from those in other countries?

Amit Agarwal (AA): We launched Amazon.in in India in June, 2013. We have completed over 22 months of operations in India so far and have received a fabulous response from both customers and sellers.

We launched in India with two categories – books & movies, and TV shows – and in 22 months, our total selection now stands at more than 22 million products across hundreds of stores and categories, making Amazon.in India’s largest online store. On an average, we have launched a new department every 14 days since we started operations in India. We have witnessed phenomenal selection growth across several stores and are already the largest across India in 13 categories that are on Amazon.in, including books, music, video games, toys, home and kitchen, luggage and backpacks, fashion jewellery, beauty products, movies and television shows, men’s inner wear, sports, fitness and outdoors, pet supplies and precious jewellery.

In terms of services, we were the first ones in India to introduce guaranteed delivery services, including the ‘Two Day Guaranteed Delivery’ and ‘One Day Guaranteed Delivery’ services for items fulfilled by Amazon. Within a short time, we have been able to make available over 700,000 products for next day delivery across hundreds of postal codes in India. More than 70% of our customer demand is already eligible for next-day shipping on products fulfilled by Amazon.

In the past 22 months of operations in the Indian market, we have seen an unprecedented growth across all departments including the usual suspects like consumer electronics, books, shoes, watches, baby products, apparels and also others like gourmet and specialty foods, pet supplies, musical instruments, office & stationery supplies and automobile & bike parts and accessories.

We are working towards transforming the way India shops for and sells fashion. Fashion is among the top three departments on Amazon.in. Our selection continues to grow by the second and our sales have grown exponentially too. Just to give some examples, the watch category has grown by 700% in 16 months; jewellery has grown by 3,000% in the same timeframe; apparel has grown by 300% in three months; and shoes has grown by 350% in eight months.

We just recently concluded a very successful first season of the Amazon India Fashion Week. Our partnership with the Fashion Design Council of India (FDCI) gives us an opportunity to partner with the huge talent pool of designers. We want to work with them and help them leverage the power of technology to access and provide unique experiences for their new gen customers across India. Responding to customer feedback, we launched the designer store last month, enabling customers across India an easy access to designer wear.

Our experience of working around the world has shown us that customers around the world are similar. I am yet to come across a customer who will say that he/she wants a smaller selection or higher prices. Customers around the world always want a vast selection at low prices and a reliable and trustworthy online shopping experience. Indian customers are no different. We are focused on ensuring we are able to deliver and raise the bar for online shopping in India.

TDB: What kind of products on Amazon.in are the most popular? Which cities in India do you get the most orders from?

AA: Customers are ordering unique selection with the same enthusiasm as they are ordering popular products from across the country. For example, instruments like ektara, gopichand, harmonicas, and bamboo flutes feature in the bestsellers list on our musical instruments store along with guitars and keyboards. We have received orders for musical instruments from places like Rajahmundry in Andhra Pradesh, Bokaro and Hazaribagh in Jharkhand; food products for birds, turtles and guinea pigs from places like Nadiad, Guntur, Visakhapatnam, Nagpur, Pondicherry, etc.

We have a large store for medical supports and we have received orders from remote areas in the Northeast and remote towns in Bihar, West Bengal and Jharkhand for mobility equipment. Some exotic products like Newby flowering tea gets ordered from across India right from Bangalore, Delhi, Mumbai etc. to Bhatinda, Hoshiyarpur, Chamarajanagar, Tadepalligudem (AP), Khelmati (Assam) and many other towns. Similarly, we are thrilled to see the response from customers in smaller markets for premium and luxury Indian and international brands. Today, nearly 50% of the orders come from outside of the top eight cities.

TDB: How regressive do you think India’s FDI rules are when it comes to e-retailing? Do you expect any change in the near future?

AA: We believe opening up this sector to FDI will be good for consumers and Indian businesses as it will allow us to partner with local manufacturers to source products not carried by other sellers on the marketplace, giving Indian consumers unique and wider choices at lower prices. Allowing FDI will also positively impact infrastructure development in the country.

TDB: The e-commerce space in India is getting very crowded. What is your strategy to stay ahead of competition?

AA: Our strategy is global, very simple and is captured in a flywheel. The execution of this strategy is local. Our strategy is that you start with the customer experience and work backwards from it. Building a great customer experience drives traffic; traffic attracts sellers; more sellers drive more selection and this, further improves the customer experience. This is a flywheel. When this flywheel spins at a high degree of rotation over many years, it results in growth. This growth enables lowering of the cost structure in the ecosystem which in turn drives lower prices and enhances the customer experience further.

We are customer-obsessed and not competition-focused. Customers don’t care about how much gross merchandise sales you have or whether you are the market leader. You don’t go and shop saying, “How much did you sell last year?” Customers care about what they can buy from us. Once we have the products they care about, we focus on whether it is available to them at competitive prices in a fast and reliable manner. We work backwards from customer needs and are focused on addressing those needs through innovations and new initiatives.

To ensure last-mile delivery even in the far corners of India, we have partnered with India Post, which is one of the prime carriers that Amazon India uses as a delivery channel. Similarly, we have been consistently working towards providing our customers with a fast and reliable delivery experience right from the time we launched in India.

 

 

TDB: As per your current business model, a seller, sometimes, ends up paying as much as 15% as referral fees to use your site. How comparable are your referral rates in other countries, where you follow the same model?

AA: We operate an online marketplace in India. Our seller fees are quite transparent. The rate cards are available on our website.

TDB: As the subsidiary of an over $150 billion market cap e-commerce giant, what’s your take on the valuation that Indian e-commerce companies are getting?

AA: As a policy, we don’t comment on valuations of other e-commerce companies. However, we would like to state that the Indian e-commerce space is still at a very nascent stage with significant potential for innovation to improve customer experience. We believe growth is at an inflection point and there is a tremendous opportunity.

TDB: The new Foreign Trade Policy offers handsome incentives for exports by e-commerce companies. Is there a chance of it persuading you to move some of your international operations to India?

AA: As a policy, we don’t comment on what we may or may not do in the future.

TDB: Are you looking forward to the rollout of goods & services tax (GST)?

AA: We are very encouraged by the government’s commitment to implement GST by April 2016, and the focus on development of infrastructure. We believe both are key to “ease of doing business” by enabling and streamlining the movement of goods and services. We believe this will enable us to effectively transform the lives of our customers – both consumers and sellers. Customers can enjoy quick, convenient access to a wide selection of products from across the country; and sellers, especially small and medium businesses, can grow profitably by serving customers across the country.

TDB: Tell us how successful Junglee.com has been? Are other such initiatives in the pipeline?

AA: Junglee.com is a successful platform. Historically, in February 2012, Amazon Seller Services Pvt. Ltd. (ASSPL) made its foray into the Indian market with the launch of Junglee.com, enabling retailers in India to advertise their products for free to millions of Indian shoppers and drive targeted traffic to their stores.

TDB: For an average viewer, most e-commerce advertisements seem to be very similar. Tell us about Amazon’s advertising strategy in India.

AA: We recently announced the launch of Amazon.in’s new integrated marketing campaign ‘Aur Dikhao’. This new campaign is inspired from consumer insights that point to the fact that the Indian consumer loves to be spoilt for choice and has an insatiable hunger to see more options, more choice and more selection while making purchase decisions.

Offering customers a wide choice and a destination where they can find, discover and buy anything that they desire to buy online has been one of Amazon’s key strategic pillars. Since its launch in June 2013, Amazon’s marketplace has grown to be India’s largest store with over 22 million products from a continually growing base of thousands of small and medium-sized businesses, serving millions of customers across India. Customers on www.amazon.in and Amazon’s mobile shopping app can shop for a broad range of products from books, including eBooks, electronics, smartphones & accessories, baby products, health and personal care products to home and kitchen products, gourmet foods, sports goods, video games, movies and DVDs, to a wide array of fashion products including designer wear and more.