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Amazon'sturbo-Charged Rise in India Is Changing the E COVER STORY AMAZON'S TURBO-CHARGED RISE IN INDIA IS CHANGING THE E-COMMERCE MARKET. Jeff Bezos, founder of Amazon, and Amit Agarwal, Country Head, say it's 'Day V for e-tailing in India COVER STORY < m < > i—i > n orange van pulls up outside a nondescript building tering on Amazon. Most of his customers are locals. "I on a sunny April morning at a market in Mohali's will be able to access a wider market. My main goal is Phase 7. The three-storied structure houses watch, to increase sales. If I earn lower margins, it doesn't mat• footwear, handbag, garment, air ticketing and jewellery ter," he says. stores. It also has a 'Spoken English' centre. Over the Amazon has taken this van to over 120 small cities course of the day, many shop owners visit the van. and towns, in dense markets, with an aim of convincing Some come out of curiosity, and a few because of what small sellers to board the online bandwagon. The more they have heard goes on inside. the number of sellers, the more will be the number of The van is a veritable studio on wheels. Shop own• products on its site. So, over the past year, it has added ers walk in with their products and get them shot and all sorts of small sellers, from weavers in Nadia in West catalogued. A training video played inside provides a Bengal and Pochampally in Telangana, to the tradi• step-by-step guide to selling online. Amazon India, the tional wooden toy makers of Channapatna in local business of the world's largest e-tailer by revenue Karnataka. The company's executives love to explain and market capitalisation, calls this seller enrolment how this diversity of products ties into a flywheel. Gopal drive 'Tatkal'. There is a reason to it. If all goes well, a Pillai, the Director & GM of Seller Services at Amazon seller can be "on-boarded" and launched on the site in India, takes this writer's notebook and draws the fly• less than an hour. wheel. It all starts with better customer experience Gurpreet Singh owns a mobile accessory shop in which, he says, leads to more traffic. More traffic en• Zirakpur, 15 kilometres from the Mohali market. He courages more sellers to join the platform, which leads came to know about this van from friends and landed to more products and, eventually, a better customer up with two products, a mobile charger and an exten• experience, completing the wheel. sion cord. He thinks Amazon will help him "sell 24/7". This flywheel has been spinning at a lively pace for Then there is Anil Mittal, owner of a paint and hard• Amazon India. ware store who was approached by Snapdeal a few months back but didn't give in to their demand for Starting Up higher commission. He now sits at the cash counter of The company launched with 100 sellers in June 2013. his store, sips tea, flirts with a pen, and says he is regis- That time, Flipkart, Amazon's biggest rival in India, was 62 BUSINESS TODAY July 16 2017 < Amazon's relentless rise has forced Flipkart founder Sachin Bansal and Snapdeal founder Kunal Bahl to seek protection already six years old. It had just shifted from an inven• tory-led model and become a marketplace. It was nearing annual Gross Merchandise Value (GMV) of a billion dol• lars. Five out of six Indian online shoppers visited its website. The picture is a lot different now. By July 2016, Amazon India had enrolled one lakh sellers. This count has doubled. In 2016, these sellers added over 180,000 products every day. That selection — Amazon claims over 100 million products on the platform — has resulted in a better buyer experience. Against Amazon's two lakh sellers, Flipkart's seller website talks of "100,000 + busi• nesses growing rapidly". < < BT studied data from different sources, from corn- > z Score and SimilarWeb to App Annie and Alexa. Nearly all suggest higher desktop and mobile traffic at Amazon td than any Indian rival. Over the past six months, on desk• > top and mobile web, Amazon.in has consistently beaten AMAZON INDIA VS TEAM FLIPKART Flipkart group revenues are far higher than Amazon's AMAZON INDIA** TEAM FLIPKART REVENUES FLIPKART TOTAL REVENUES 2,275.36 1,951.7 4,477.3* MYNTRA SNAPDEAL Flipkart-Snapdeal merger awaiting approval 1,456.6 eBAY INDIA* Flipkart-eBay merger approved by CCI 132.1 Figures In ^crore for year ended March 2016; standalone data; # Group total for Flipkart Internet, Myntra and Snapdeal; Jabong numbers not available; * Data for 2014/15; **Amazon implies Amazon Seller Services: Source: MCA Every third Amazon India order is a Prime order. Launched in July 2016, Prime offers free one- and two-day deliveries. Members can also watch free video content < IrH > C/O > > • AMAZON FULFILLMENT CENTRE: Great execution is at the heart of Amazon India's success story. It now has 41 centres spread across 13 states with a storage capacity of 13 million cubic feet. Flipkart in terms of overall visits, according to data from However, revenues of the Flipkart group — which now market intelligence company SimilarWeb. In May, visits includes Myntra, Jabong and eBay India —would beat to Amazon totalled 222.69 million, compared to Amazon's by a handsome margin. The group is set to Flipkart's 127.71 million. The Android app data from get a tad builder, perhaps complicated, if the anticipated the company show Amazon has been beating Flipkart acquisition of Snapdeal by Flipkart goes through. in daily active users, or DAU, since February 2017, al• Snapdeal may have significantly contracted, but though the average app usage time on Flipkart is nearly Amazon will still take time to counter this gang-up. The a minute higher than on Amazon. DAU is a measure of revenues of just Flipkart (Flipkart Internet), Myntra and stickiness. And as a percentage of all Android devices, Snapdeal total ^4,477 crore. More on this later. Amazon app installs have seen a steady rise, while Meanwhile, Amazon's turbo-charged rise in India Flipkart app installs have fallen. has impressed Jeff Bezos, the flamboyant founder and Data from App Annie show that Amazon has been CEO of Amazon whose current net worth ($85.7 billion) leading in app downloads over the last one year. Only is 18 times what Flipkart has raised since 2009. "Our Paytm had higher downloads for four months starting India team is moving fast and delivering for customers November due to demonetisation. And a Forrester and sellers. The team has increased Prime selection by study (Consumer Technographics Asia Pacific Online 75 per cent since launching the programme nine Benchmark Survey) said that Amazon surpassed months ago, increased fulfillment capacity for sellers by Flipkart as the preferred online retail destination for 26 per cent already this year, announced 18 Indian metropolitan Indian consumers for the first time in original TV series, and just last week introduced a Fire 2016. "Amazon's takeover has been rapid: In 2014, TV Stick optimised for Indian customers with integrated 30 per cent respondents of our survey reported buying voice search in English and Hindi," he said in from Amazon; in 2016, the figure was 76 per cent. Amazon.com's earnings press release for the quarter The company mostly stole market share from players ended March 2017. "We're grateful that customers are such as Snapdeal and battled Flipkart in categories responding — Amazon.in is the most visited and the such as smartphones and electronics," the research fastest growing marketplace in India. It's still Day 1 for firm wrote. e-commerce in India, and I assure you that we'll keep The increased traffic has resulted in a better conver• investing in technology and infrastructure while work• sion rate. Data from Registrar of Companies (RoC) show ing hard to invent on behalf of our customers and small Amazon was slightly ahead of Flipkart on a standalone and medium businesses in India," he added. basis in revenues in 2015/16. Amazon clocked reve• Before launching in India, the India project was code nues of ^2,275 crore, ^324 crore more than Flipkart. named "Cricket". Now, the Seattle headquarters has a 64 BUSINESS TODAY July 16 2017 AVERAGE APP USAGE TIME People spend more minutes on Flipkart app per visit building called Cricket. Yet another building is chris• 10:05 tened Day 1, a widely-used term in Amazon, meant to remind employees that it is still at the beginning of the 08:38 innovation curve. India executives have taken that a step further. 07:12 "It is Minute 1 of our journey." 05:46 The Gang-Up Both Day 1 and Minute 1 are veiled threats to rivals. 04:19 Amazon executives see a hockey stick curve ahead in Jun 16 Jan 17 May 17 2017 and are investing for that growth. Amazon has, thus far, openly committed to pumping in $5 billion, but looking at Bezos1 interest in India, it would be fool• ish to assume he would stop anytime soon. Flipkart, in contrast, has raised $4.67 billion in 14 rounds since CURRENT 2009, according to data from Tracxn — a little more than $4 billion of this came after Amazon's entry into INSTALL RATES the country. Amazon installs, as a % of Amazon is investing these billions across the board. Android devices in India, " A lot more money is invested in trying to enable the have risen fast 40% ecosystem. People confuse it with marketing.
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