The Customised Playbook
More than 9.5 crore people visited within the first 48 hours of Amazon’s Great Indian Festival 2023, marking its highest-ever comparable number in the last 10 years. Over 80 per cent of these came from non-metros. The numbers reveal much of what comprises Amazon’s current attributes and growth in India.
The year 2023 cannot be said to be a good start for big tech per se including the ecommerce sector. Amazon was not exempt from this and India was among the markets where the company had to take steps such as layoffs amid cost control. As the year comes to a close, courtesy of several factors including India’s growth opportunities and Amazon’s early pivot to different verticals and growth avenues, the company has been able to turn the tide and continue its growth trajectory.
“We say at Amazon that it is still day one for us, which is an important way to ensure we continue our customer focus. In India, I would say it is still day zero,” remarks Manish Tiwary, the vice president and country manager of Amazon India’s consumer business.
The India Game Face
Like most of its peers, Amazon has customised its playbook for India. “India is a large, growing market but we must keep innovating. We recognise that there is no single way to approach the next 500 million. There will be multiple efforts – be it languages, shopping experience, delivery speeds or even social commerce,” Tiwary explains. Much of this forms part of Amazon’s India strategy and contributes to the company’s massive growth from 100 to over 12 lakh sellers, covering a wide footprint of the country.
Most notable among Amazon’s India play are Amazon Prime and Amazon Pay which have together gone a long way in creating a more holistic offer. While Amazon Prime is instrumental in making ecommerce a phenomenon beyond tier 2 and 3 cities, Amazon Pay boasts eight crores plus users for UPI and over five crore users for Amazon Pay Balance.
Another important step for the company was setting up Amazon Business, which aimed at transforming the way businesses buy and sell in India and focuses on making procurement easy and cost-effective for business customers.
“Ranging from sectors such as manufacturing, IT services to hotels, hospitals, healthcare and much more, our aim was to solve all the procurement needs of businesses and support them in bringing down their overall expenses, thereby helping them focus on other aspects. We started off with 14,000 sellers and continued to innovate to help customers revolutionise their procurement process over the past six years,” comments Suchit Subhas, the Director of Amazon Business in India.
The Specialists amid the General
An important tenet of Amazon’s growth story was creating category-specific verticals such as Amazon Fashion, Amazon Wireless & TV and Amazon Fresh. Customised category experience and verticals such as beauty, fashion, jewelry are expected to have a stronger competitive advantage.
“The penetration of ecommerce in various categories ranges from below 5 per cent in staples and mature FMCG products to 40 per cent in metro-centric products. Ecommerce players with a tier 2 expansionary focus will see greater growth unlock. The pureplay ecommerce marketplaces are expected to see a continued run especially being fuelled by tier 2 customers,” notes Angshuman Bhattacharya, National Leader, Consumer Product and Retail, EY India
This is not very different from the Amazon experience. “In the last decade, Amazon Fashion has been working towards offering customers a wide selection of international and homegrown brands and today delivers across 100 per cent pin codes with assured two-day delivery in more than 200 cities,” shares Saurabh Srivastava, the vice president of Amazon Fashion India.
Amazon Fresh is a much newer vertical for the company, being only two years old in its unified avatar after the merger with Pantry. “Amazon Fresh allows us to serve many customers by offering great value, unmatched selection and the best quality products at convenient delivery slots,” adds Srikant Sree Ram, the director of the vertical.
Growing The Market
Amazon, like Flipkart, is considered one of two large general pureplay ecommerce platforms in India. The two claim about 60 per cent of the market share with Flipkart in the lead, according to brokerage firm Bernstein, which also stated that Reliance is poised to outpace both Amazon and Flipkart in the race towards India’s $150 billion ecommerce market.
One of the greatest drivers for ecommerce in India is the gradual expansion of tier 2, tier 3 and below markets. This, coupled with competitive prices, faster product availability and growing aspirations are creating the perfect mix for ecommerce in India. Both rural and urban markets are seeing positive consumption growth. As overall inflation drops along with price cuts, consumers are now cautiously optimistic and are opening their wallets.
Buoyed with this, and characteristics unique to India, Amazon India is leading the company’s move in some areas. For example, most Amazon sellers began with and continue to largely depend on mobile for their business. Citing this, Manish Tiwary says, “We (Amazon India) lead the Amazon seller mobile application globally because most of our sellers use mobile. We have close to 12 lakh sellers and about 70 per cent of new sellers come from smaller places.”
Festive Fever Increases
Tiwary also says that this festive season will be the biggest-ever by quite a margin for Amazon. The Great Indian Festival 2022 saw continued ‘seller-brations’ with more than 35,000 sellers witnessing their highest-ever single-day sales. Over 70 per cent of sellers across India came from tier 2-3 towns and cities. Similarly, Amazon Business witnessed participation from over 4.75 lakh MSME buyers.
The year 2023 is already beating these numbers, as per Amazon, seeing the “best-ever start to the event, with thousands of sellers achieving their highest-ever single-day sales”. The festival also saw the highest-ever sign-ups on Amazon Pay UPI in the first 48 hours.
The Big Impact
India’s ecommerce sector is a pivotal contributor to economic development, enhancing GDP through revenue generation and job creation. Growth in ecommerce leads to higher revenue for MSMEs, branded as well as un-branded products, logistics and financial services sector among others. This is also the reason it is seeing the advent of large, new players and active work from the government seen through ONDC. “The sector’s success attracts investments, propelling startups and innovations, and aligns with the ‘Digital India’ initiative, promoting digital literacy and transactions, especially in rural areas,” comments Anand Ramanathan, Partner, Consumer Industry Leader, Consulting, Deloitte India.
Tiwary is not rattled by these though. “What ONDC is striving to achieve aligns perfectly with Amazon’s global ethos of serving consumers by providing them with the freedom to choose their preferred sellers. People will find different models to address the consumer and that is good for the ecommerce ecosystem. Once you hit 99 per cent penetration, then you can start thinking about competition,” he says. Much like its leader, Amazon India is all geared up to continue growing the pie in the face of newer challenges.
