Amazon has done in 3 years what rivals didn’t in 10: Amit Agarwal
Bengaluru: India’s largest e-commerce firms Flipkart and Amazon India are going to battle over condiments, candy and digestive powders. During the all-important festive season sale, which will help determine the future of e-commerce in India, nobody could have predicted that hing (asafoetida) and churan (digestive powder) would dominate the e-commerce discourse.
Yet, the leaders of India’s top e-commerce firms have made these items the focal point of the debate around who won the sale and what their respective performance signifies.
Last week, Flipkart chief executive Binny Bansal took a swipe at Amazon, saying the American e-commerce giant had misjudged customers’ needs during the festive season sale by focusing on sale of groceries, which helped inflate Amazon India’s sales numbers, according to Bansal.
“(Flipkart’s) total units sold include only physical goods and do not include virtual membership and low-cost items like churan, hing, candy, detergent bar and eggs!,” a Flipkart spokesperson had said in an emailed statement to Mint, which Bansal repeated to other publications. That was in response to Amazon’s statement that its single highest-selling product in its Great Indian Festival sale was the Amazon Prime subscription, and groceries were among its other big sellers.
In an interview with Mint on Sunday, Amazon India chief Amit Agarwal responded to the put-down by saying that the company had accomplished in three years what Flipkart hadn’t despite launching much earlier and acquiring several companies including Myntra and Jabong. Agarwal said he was proud customers were shopping for every day items, such as hing and churan, as well as for mobile phones, televisions and other products.
Beyond the ludicrous public statements, what’s at stake is the future of e-commerce, not in terms of its popularity but insofar as which company is best positioned to dominate online shopping. If Amazon is able to retain shoppers who bought every day items on its platform during the sale, its strategy to focus on delivering whatever customers wanted rather than pushing only high-value products will have been validated.
Edited excerpts from Agarwal’s interview:
Critics say the number of online shoppers stagnated this year. What does the sale tell you about how widespread e-commerce is?
If we look back at this sale five years from now, we will find that this is a huge inflection point for e-commerce in India that fundamentally changes the rules of the game.
We delivered to 90% of all serviceable pin codes in India. E-commerce has become mainstream. It doesn’t depend on where you are. Customers anywhere in India are taking to e-commerce. Then, there’s diversity of products. People not only came to Amazon to update their mobile phone or buy their appliances, but yes, we are very proud that they came to buy hing (asafoetida) and churan (digestive powder). Our top categories were still the usual suspects— mobile phones were five times bigger, TVs were 25 times bigger, large appliances were seven times bigger than what you see on a normal day. But first-time customers want to buy the everyday things like hing and churan. And that’s the e-commerce we want.
If somebody is saying that we sell a lot of mobile phones once or twice a year to people who can spend at least Rs10,000 and that customers are not willing to pay for delivery—if that is the notion of e-commerce then we would have failed.
The e-commerce we want is that no matter where a customer is, they trust us to buy anything.
Did you achieve the objective and targets you’d set out for the sale?
The purpose of these kind of sale events is not to sell a particular kind of product in large quantities.
What is important in these sale events is to expand your customer base so that when they come to you every day subsequent to the sale you’ll keep growing. That’s the objective. If you ask yourself, was my sale successful? You’d consider these things: did I get a lot of new customers; did I get new customers from areas I wasn’t known in before; and are they going to come back after the sale?
We’ve grown 135%, on average, year-over-year in every quarter (this calendar year). That compares with flat or negative growth for the overall market and for other players. And we continued that momentum (by recording three times sales growth in the sale week). It’s exciting that in a little over three years, we have done and we’ve led the pack for what e-commerce should be, what others in 10 years and with multiple acquisitions have not come close to doing. I’ll take this any day.
Prime was your best selling product. What does it say about shopping habits?
In India, in a little over two months, Prime is already our top seller. People are willing to pay Rs499 to buy a whole year of convenience. In a country where people would want to eke out even the last hour of their free trial and for them to trust you so much and for them to tell you that I’m going to buy from you so much, that I’ve done my mental calculation that this Prime membership is worth it. That’s a huge statement about which website customers are choosing. And even more, it’s a huge statement that customers in India are starting to care about convenience more than they cared about before (the launch of Prime).
Is Prime the kind of service that will attract new customers or is it mostly to lock in existing ones? Do you think Indian shoppers have the inclination to pay for content?
We would not be investing what we are investing in content, if we did not believe that there is an opportunity to change the way people consume content in India.
We are after all a Wall Street-monitored business, we would not be investing so much money if we didn’t believe that… the bar for customer experience in India is low. And Amazon Instant Video raises the bar for providing on-demand access to Hollywood and Bollywood content and premium content that customers can watch ad-free. It allows you great convenience—just like online shopping... India is a content-hungry country, not to mention the influence of movies in lives. People are lapping up Prime. Once content comes in, I think it will be irresponsible for people not to buy Prime.
What’s the plan for the rest of the festive season?
The Great Indian Festival is on for the whole month, you’ll find multiple pockets during the month that we celebrate. For example, last year also, we had done first five days when we did a sale. Then closer to Dhanteras, we did something. So I’m saying, there is celebration across the month. You will find exciting things happening across the month.
But yes, our sale period ended on 5 October. But you should stay tuned—there will be targeted offers that will be coming out through the month, which is what we did last year for 30 days. It was five days and then we did another three days sometime and we had Dhanteras— because people have different needs at different points in time during the month.
As far as the Diwali sale goes, what are areas that still need improvement? What are things that could have been better?
Even after 20-plus years of e-commerce, we have a lot to improve, even in the US... Every time a package does not reach a customer, every time we are unable to fulfil an item that a customer wants to buy because it is not in stock—these are all defects. These defects will continue for a long, long time. Take a mathematical example, when you have over 15 million units, and let’s say you have 99% accuracy, you will have 150,000 defects. That’s a large number, a lot of customer queries and a lot of customer complaints.
At the scale that we operate...the accuracy has to be so high, you will always have defects. And you will always have opportunities to improve. That’s the high bar we set for ourselves.