Home > companies > Amazon tests tie-ups with kirana stores

Bangalore: Amazon.in is testing out a raft of delivery solutions for customers and tapping unusual places, including neighbourhood grocery stores and petrol pumps run by Bharat Petroleum Corp. Ltd (BPCL), as the online marketplace seeks to expand its reach, cut product delivery time, improve its brand awareness and compete better with local rivals.

Amazon Seller Services Pvt. Ltd, as the India-incorporated unit of the world’s largest retailer is called, started doing business in India only last June and lags market leaders Flipkart and Snapdeal. Amazon has been fast expanding its range of offerings, adding several new products such as electronics, toys, music and apparel as well as building its logistics network to ship these products to shoppers as soon as possible.

“We are continually innovating to find solutions that enhance the convenience and experience for our customers on Amazon.in," said Amit Agarwal, vice-president and country head, Amazon India. “Towards that we are running a pilot in Delhi and Mumbai to ascertain the benefit of (in-store product pick-ups at BPCL outlets). Depending on results, we will take a call on how and what we want to roll out and we will make further announcement on this at an appropriate time," Agarwal said in an email through a spokesperson.

India’s e-commerce market reached $12.6 billion last year, an annual increase of 32.63%, according to lobby group Internet and Mobile Association of India.

Amazon India also started a pilot late April in which it is using so-called kirana stores, or neighbourhood grocers, in Bangalore to help deliver products to customers. If the pilot is successful, the company may expand the business. The Times of India and The Wall Street Journal have reported this earlier.

“We have identified and trained the staff at small kiosks and stores, run by individual entrepreneurs, to be our shipment pick-up points," Agarwal said.

Amazon isn’t the first site in India to use kirana stores and other local places to deliver products to customers. Sites such as Freshndaily, Edabba and AaramShop deliver their goods to shoppers using a combination of technology and tie-ups withoffline companies.

However, no site has been able to gain significant scale among kirana stores yet, and experts tracking e-commerce said they were sceptical whether Amazon can do any kind of meaningful business through this channel.

“It’s difficult because it’s tough to scale and maintain consistency and quality of customer service with kirana stores," said Rajesh Raju, managing director and partner at Kalaari Capital, a venture capital fund. “You’re asking a kirana guy who may not be tech-savvy to use technology—and that apart from running his regular business. How would he be able to proactively keep track of the products, use technology and run his regular business at the same time? It sounds very complicated. The customer experience is bound to suffer."

Consumer goods companies such as ITC Ltd and Hindustan Unilever Ltd have successfully used the vast network of kirana stores, so if Amazon can crack it, the opportunity is “huge", said Rutvik Doshi, principal, Inventus Capital Partners, a venture capital firm. “But it’s a tricky thing to implement because of the risk to customer experience and I’m sceptical if they would be able to do it. Others have tried this in the past, but because of various reasons no one has really been able to scale up," he said.

“They do this kind of thing in the US as well where they have their own pick-up points. But it’s a different thing running your own pick-up where you can control the customer experience versus kirana stores," Doshi added.

Amazon runs a similar service in the US. It has set up pick-up locations which its customers use to collect their products when it’s convenient.

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