After Flipkart confirmed US$1 billion funding, Amazon has announced US$2 billion investment in India. What’s the survival strategy in India now?
A day after Indian e-commerce player Flipkart announced fresh funding of US$1 billion, the largest round by an internet company in the country, American e-commerce giant Amazon today announced it will invest an additional US$2 billion in the Indian market.
Amazon will use the funds to support its rapid growth and enhance the customer and seller experience in India.
“After our first year in business, the response from customers and small and medium-sized businesses in India has far surpassed our expectations,” said Jeff Bezos, Founder and CEO, Amazon.
“We see huge potential in the Indian economy and for the growth of e-commerce in India. With this additional investment of US$2 billion, our team can continue to think big, innovate, and raise the bar for customers in India. At current scale and growth rates, India is on track to be our fastest country ever to a billion dollars in gross sales. A big ‘thank you’ to our customers in India — we’ve never seen anything like this,” he added.
Amazon’s latest developments
Recently, Amazon announced its plans to open five more fulfilment centres in the national capital Delhi, the southern city of Chennai, the northern city of Jaipur, the western city of Ahmedabad and in Tauru (outskirts of the Delhi NCR-Gurgaon).
With the additional storage capacity and its two existing fulfilment centres in the western and southern cities of Mumbai and Bangalore respectively, Amazon has almost doubled its total storage capacity to over half million square feet.
Customers in these states and nearby areas can expect broader selection across categories available for immediate shipment and eligible for Amazon’s ‘Next Day’ and ‘Same Day’ guaranteed delivery services. The fulfilment centre in Chennai is already operational and the remaining four will be operational next month.
A push to local players
Amazon has introduced a host of innovative offerings in the Indian e-commerce space, thereby forcing native players to evolve. In December 2013, Amazon introduced ‘Same Day’ delivery service, which pushed Flipkart and Snapdeal to launch the same to survive the fierce competition. Recently, the e-commerce giant also took the smaller brick-and-mortar shops or ‘kirana’ route to deliver goods. It ran a pilot for in-store pick-up service in Bangalore where some of the mom-and-pop stores served as the shipment pick-up points for customers. This move helped in tackling the failed delivery problems.
It has also partnered with Catamaran, the venture capital fund owned by Infosys Co-founder Narayana Murthy to help India’s SMEs take their business online and tap the fast-growing online customer base.
As the e-commerce giant is getting serious about the Indian market, native players are slowly moving towards consolidation and replicating the successful model of Amazon. It is surely giving a nightmare to many, but smaller players addressing to a niche category should not worry because every player will remain important as long as it addresses the niche audience (i.e. Myntra, Makemytrip, etc.). However, India-centric innovation will remain the key to success in this rapidly emerging and competitive market.