Home / Industry / Retail /  Amazon says will expand services in India

New Delhi: Immediately after news that eBay invested an undisclosed sum in Snapdeal, and just a few months after Flipkart announced it would use the marketplace model, Amazon on Wednesday officially launched in India.

Amazon.in gives users access to sellers of books, movies and TV shows. The company will be increasing the range available, with cameras and mobile phones due next. This is the 10th country-specific site that Amazon has globally, apart from the main US one.

The company intends to expand services and will eventually bring its entire global line of programmes to India, said Greg Greeley, vice-president, international expansion, who was in India for the launch.

For now, owing to foreign direct investment (FDI) regulations, the company has to follow the marketplace model, where they are not directly selling any of the products on the site, but are handling logistics for the sellers, with their “Fulfilled by Amazon" model.

Greeley said, “We want to bring all our offerings to India but it’s still day one. We can’t say anything about regulations, of course, that’s in the government’s hands, but we would certainly encourage any steps in this direction. The law is a little consumer unfriendly right now."

Amit Agarwal, vice-president and country manager, Amazon India, who is responsible for operations at both Amazon.in and Junglee.com (Amazon’s price comparison site, which launched in February 2012), said, “We want to do the heavy lifting, and let the sellers focus on their core business. We help them to cut costs on logistics and discovery, and they’re able to offer lower costs to the customers, which, in turn, benefits them by giving them a bigger audience."

What that means is that Amazon will handle things like the payment infrastructure, fulfilment, customer service, shipping and returns, which can be scaled to meet the seller’s needs.

Deepa Thomas, e-commerce evangelist, eBay India, said the company was pleased to see the entry of Amazon in India, as it would only increase adoption of e-commerce in India. She said, “It is a good sign. When reputed players enter the market, it raises interest." She pointed out that e-commerce still accounts for only around 10% of online usage, and said there was a lot of scope for growth.

SnapDeal CEO Kunal Bahl said, “We welcome the entry of global e-commerce companies into India with an online marketplace model. This further validates the potential of the Indian market and reiterates the importance of the managed marketplace model in India."

Asheesh Raina, Mumbai- based Principal Research Analyst at Gartner Inc., said that the launch of Amazon.in was long expected, and was required to grow in India. He said, “This is a very high volume market, and the company needed to show commitment to get vendors on board. So, I see this as a positive development, but not something groundbreaking."

For sellers, Amazon is offering two options right now. One is selling on Amazon; there, the listing and payment is on Amazon, but logistics are handled by the seller. The second is fulfilment by Amazon, where Amazon also handles the deliveries. Sellers pay a monthly subscription fee for the merchant, along with a referral fee for successful transactions. However, for the first year, the company is offering a free subscription, and a discounted referral fee of 5%, instead of the normal 12% fee. Fulfilment by Amazon is optional, but a quick look at the site shows that a majority of sellers are using the service.

For buyers, too, there is a launch window where there are no delivery charges, and no cash on delivery charges. Agarwal said that the timeline for this decision isn’t fixed, and added, “We’re watching the consumer feedback. We’ve made the whole thing very transparent, and we won’t charge for things overnight. It’s going to be something we do based on what the customers are saying."

Greeley added that the same logic will also be used to roll out other product categories, besides books and movies. Agarwal also confirmed that the sellers can’t add their offerings directly yet, and said, “We look at the selection, scale and speed that the companies can offer, and help them to make the most of the system." Greeley added, “In other countries, self-service is in place, and that’s something that’s going to come to India too. Right now, it’s still day one and we’re building the experience."

Some believe that the entry of Amazon is going to have a negative impact on companies such as Flipkart, which, on 4 June, reached a milestone of selling 100,000 books in a single day. Flipkart also follows a marketplace model, but Agarwal points out that sellers don’t need to be exclusive to one platform, and will only use a platform that gives them a competitive advantage.

There are certainly gaps in what Amazon is offering right now, which need to be fixed. For example, a few books were listed with the wrong author on the site. Agarwal said that this will be fixed over time, with both technology and manual editing.

He said, “That’s one of the advantages that we are offering, that I don’t believe other platforms give the seller. We’ve got a lot of data to draw on that leads to better quality listings, and better response for the sellers."

The marketplace model, which was pioneered by eBay, and is used by sites such as Flipkart, SnapDeal and Infibeam today, is quickly gaining ground in Indian e-commerce—the move gives them access to much more inventory than before, without significant investment.

At the same time, Amazon’s other business in India, the price comparison website Junglee.com will also continue to function. Agarwal says, “In a way, Junglee is a map of the e-commerce space, and our goal is to have Amazon.in show up on that map in a good position. Junglee served to confirm and validate our views about India, about what the customer is looking for. It’s also helped us to see a lot of sellers, who aren’t well known, but are offering a great catalogue. They would make great candidates for Fulfilment by Amazon, so in that way, we see Junglee as very complementary to what we’re doing with Amazon.in."

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