Saturday, May 3, 2014

RETAIL SPECIAL................... Amazon Seeks to be New Lion of E-tail Jungle


Amazon Seeks to be New Lion of E-tail Jungle 
 
US e-tailer lures online merchants from Indian rivals, expands range for same-day delivery


    Amazon India is casting a snare to draw more small merchants into its fold as it battles India’s top online retailers Flipkart and Snapdeal for supremacy in India’s booming ecommerce industry. Beginning Wednesday, merchants can sell their wares on the same day they register on Amazon’s portal compared with the nearly two weeks it takes on competing platforms. The world’s largest online retailer is also expanding the range of products that will be delivered to customers within a day, displaying the trademark aggression that marks its global operations nearly 10 months after launching services in India.
“A few thousand sellers have already registered for the new service,” said Amit Deshpande, a director and GM at Amazon India, who added that the company already has a roster of 4,000 sellers. These moves, coming days after the company launched a highvoltage advertisement campaign including television spots during the current edition of the Indian Premier League (IPL), is aimed at getting the largest number of merchants and the widest variety of products for Amazon customers.
“Amazon is moving from first gear to fourth,” said Arvind Singhal, chairman of retail advisory Technopak. “They have the basics in place.”
Amazon is the Trendsetter Now
Market leader Flipkart, which just reached the milestone of $1 billion (over . 6,000 crore) in sales, also has about 4,000 sellers on its marketplace. But it follows an invite-only model to sign on sellers which is more time-consuming. “Even though I am already a seller on Flipkart, if I need to add a new category it will take about two weeks to start selling,” said Eshan Arif, 24, co-founder of Bangalore-based music and movie merchandise store Hysteria.
For a first-time registration it takes about three weeks from signing up to a live listing. Flipkart declined to comment for the article.
Industry estimates peg Amazon India’s sales at over $200 million (. 1,200 crore) although the company declined to share sales numbers. At current growth rates Amazon is capable of clocking sales of $1 billion (. 6,000 crore) by the end of March 2016.
This will make Amazon the first online retailer in India to reach the magic number within three years of launch. Flipkart, which reached the milestone in March this year, took seven years. Snapdeal, launched in 2010, expects to reach $1 billion in sales this year. Snapdeal did not respond to email queries. Merchants who do business with all the top Indian portals said Amazon has taken a lead in categories including books and watches and is set to duplicate it in jewellery and baby care.
The company’s latest delivery service, easy ship, will allow sellers to ask for a product to be picked up and shipped by Amazon. It will also provide cash-on-delivery for these sellers’ orders, an option so far available only to those who stocked products with Amazon. The service, which has 400 sellers already registered, will be available in 30 cities to start with. “We now have a complete suite of services for sellers which will help them sell more and make more money,” said Deshpande, who has been with the company since 2010. This is just the latest in a string of initiatives from the Seattlebased company that is stirring up the Indian online retail industry estimated at $3 billion (over . 18,200 crore).
Last December, Amazon launched ina-day delivery service forcing Flipkart and Snapdeal to follow suit. Flipkart and Amazon also launched their Apple iPhone and iPad applications within a day of each other.
“Amazon is forcing Flipkart to push ahead with its customer and seller services,” said Ashish Jhalani, head of advisory services firm eTailing India. In Delhi and Mumbai, Amazon.in is piloting pickup services where customers can pick up their orders from In & Out stores located at BPCL petrol stations.
“Amazon is pretty much the trend setter,” said Mahesh Murthy, founding partner at early stage venture fund Seedfund. “When Amazon started charging for delivery, Flipkart did the same.”
Industry experts said Amazon India has done right by first focusing on back end processes instead of blindly chasing customers upon entry. “They built the logistics network, warehouses and built up a large selection of products that is helping them win customers now,” said Technopak’s Singhal.
The company now has about 1.5 crore products listed on its site and two warehouses, each measuring over 150,000 square feet, in Mumbai and Bangalore. Earlier this month Flipkart said it had millions of products across 21 categories and 40 sub-categories. At peaktimes, the Bangalore-based company ships 1.3 lakh products a day.
Amazon said its strong back end infrastructure is helping it scale up fast. “When we decide on areas of focus, we always work backwards from customer,” said Deshpande of Amazon.in. “Selection, delivery experience, logistics, payments and website experience are areas we are super focused on.”
Customers are taking note.“I used to buy books from Flipkart, but now I buy from Amazon.in as I see better variety there and it is the same price if not cheaper than Flipkart,” said Shradha Patnaik, 24, a communications professional who lives in Delhi.
Merchants too are happy with their experience on the site. “Margin cut at Amazon is about 6-7%, compared to 10-12% at Flipkart,” said Hysteria’s Arif. While these indicate that Amazon is chipping away at the fortress that Flipkart has built, overtaking the market leader will take some doing.
While prices in categories like books are similar or Amazon.in is cheaper, in areas like mobiles and tablets, Flipkart is cheaper in most models. Flipkart is able to do this as WS Retail, a seller on Flipkart, is its subsidiary and gets most of its inventory directly from brands. “Flipkart’s WS Retail also buys outright from us and accounts for about 80% of our volume on Flipkart,” said Vivek Prabhakar, co-founder of design merchandise firm Chumbak, for whom online sites account for 18% of overall sales.
Experts too believe that Flipkart has been able to fight back, for now. “Flipkart has the people and has built processes and technology. They are fighting back powerfully,” said eTailing’s Jhalani.
Many believe that the battle will only truly begin when Amazon.in launches apparel. Flipkart is believed to be in talks to acquire rival fashion portal Myntra to shore up its defences.
Amazon which launched other fashion categories lately, the most recent being shoes is expected to launch apparel in the first two weeks of May.
“For the short-term Flipkart has bought time,” said e-Tailing’s Jhalani.
RADHIKA P NAIR & ADITI SHRIVASTAVA ET140423

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