The Seattle based ecommerce company which was founded in 1994 came in India in 2013.
The global E-comm leader entered our market when homegrown players like Flipkart & Snapdeal had already set up shop. Most pundits said that Amazon would have to start from scratch however; Amazon has fared well by effectively using the cards they had been dealt with. Let’s check out some actions which helped Amazon in its journey in India to surpass the local competition.
The Base Was Set
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Before Amazon’s arrival, the E-commerce market was estimated to be around 5-6 Billion dollars, including travel bookings and online shopping. Companies like Flipkart, Myntra & so on created a niche for themselves with their amazing ad campaigns, and geared the Indian consumer to shop online. Amazon poured in heavy investment to its advantage. They targeted tier 2 & 3 cities as the metro cities were already aware of the benefits of online shopping. Amazon put efforts in building a brand name and educating sellers before starting its operations.
Worn Competition Out By the time amazon entered the Indian market, the local players has a good few years run. They were ahead in the game, but also burnt a lot of cash in customer acquisition through discounts & marketing. Most of the smaller ecommerce companies were either acquired or shut down shop. Industry leader Flipkart which successfully managed to get funding, was forced to keep burning cash to keep the discounts running. The amount of losses was more or less affecting the profit gained from the sales. Companies like Snapdeal had to lay off lots of employees. The major target for home players revolves around getting more funding and keeping the burn rate to a minimum.
Third party market place The laws in India made Amazon work with sellers in India and provide them a platform to conduct business. Amazon couldn’t sell directly to customers like they does in the USA. They revamped their entire ecosystem to work in conjunction with the millions of small sellers. Instead of posing as a threat, they gave them a business opportunity. Amazon recruited a vast number of suppliers and educated them to sell on Amazon India. They helped the sellers in creating a catalogue of their products. They then acted as a third party market place with solid logistics to lower running costs. Currently all major ecommerce players like Flipkart & Jabong use the marketplace model, where they connect sellers with buyers. A third party marketplace model lowers costs efficiently than direct selling.
Understanding The Indian Shopper Shopping online in India with cash-on-delivery (COD) is preferred by over 50% of shoppers. Most Indian Consumers are still comfortable with COD rather than paying online. ď‚ž
Home Grown E-commerce players have therefore Relied on tactics like COD payments, liberal return policies, free or subsidized shipping and inhouse logistics and more importantly vast discounts. For a company like Amazon with over 50 billion dollars in revenue, letting the Indian E-comm players burn their resources in advertising and promotion and exclusive discounts would have been the safest bet. But nonetheless they were confident about entering the huge Indian market and incorporated some of the tactics used by Indian players.
Flipkart’s big billions day and Amazons Great Indian Festival went toe to toe recently. With Flipkart Crossing the Rs. 1000 Crore mark in its first day of the sale. The amount of discounts given to the consumers would have definitely resulted in a sales fatigue. Amazon with their deeper pockets normally offers more than the competition in the form of Amazon Cashback on payments made through Amazon Pay. Amazon has been a pioneer in affiliate marketing. They have partnered with websites like xerve.in & Cashkaro.com and many more to boost sale. Shopping on these partner websites further gives additional cashback and helps shoppers save money on their spending.
The more offerings and better service a website has, the better the loyalty. Amazon has created a niche for itself in a short time with some amazing customer service and great catalogue of products. Currently the Indian market is big enough to accommodate multiple players. A few more years will tell us who would be crowned the ultimate king of the online marketplace in India.