Factors Behind Amazon's Success In India
Launched in India in June 2013, Amazon India is a brand which does not need any introduction to a majority of Indians at the present time. Despite its late entry into the Indian market, Amazon has grown at a brisk pace over the years to catch up with its top two rivals - Flipkart and Snapdeal. By doing so, it has emerged as a major player in e-commerce business in India.
Rapid Growth
Given the fact that the prominent rivals of amazon were economically in a favorable position, it was an uphill task in the early stages for Amazon to have the clout to influence the opinion of customers in India. On top of it, they also had and expensive and well-assembled leadership teams comprising of experienced senior leaders, who were the best in the business. These added up to the fact that they had more firepower compared to Amazon. However, things started changing rapidly for the company in 2015. Inspired by initial gains in market shares in 2015, the company zoomed ahead of its rivals to be in the driver’s seat subsequently.
Pricing Strategy
Having lost to Alibaba Group Holding Limited in China, the parent concern of Amazon India, Amazon.com Inc., reviewed the mistakes and worked on them to adopt aggressive pricing strategies. Being well versed with the importance of savings, the pricing strategy of the e-commerce giant in India is aimed at pricing its products in a way that the customers are able to make savings. It rolls out lucrative deals in festive seasons to help build the habit of shopping among its users. Amazon knows that price factor is the most prominent factor for Indians to buy any good,So by giving discounts coupons and offers to customers Amazon has managed to create buzz in market. Amazon have also invested a good amount of marketing budget in affiliate marketing. By partnering with top coupons and offers websites in India, like CouponChaska, Grabon, CouponDunia and CouponzGuru, Amazon has managed to expand its user base.
Splurging Cash
After a steady period of growth for a year, Amazon India registered growth at a tremendous pace like never before. Incredible as it may sound, its gross sales jumped to 250% in terms of net discounts and product returns. This can be understood when one considers the fact that it generated higher sales in the October-December period 2016 than what it could do throughout the year in 2014. One of the major reasons behind this is the decision to include an impressive array of products across various categories. Due to this move, it could grab the attention of both existing and potential customers.
In other words, Amazon not only managed to retain its regular customers but also made inroads in the customer base of its competitors by capturing the attention of their customers. While it offered over 55 million products with 85,000 sellers, Flipkart and Snapdeal dealt with 40 million products with 90,000 sellers and 35 million products with 300,000 sellers respectively.
Following the commitment of $2 billion by Bezos, Amazon Seller Services received Rs 10,730 crore approximately to spend on hiring, advertising, discounts and other things. Thus, it becomes clear that Amazon made more investment in making more products available to its users than its incumbents, which resulted in huge success later on. In the later stages, it also brought about a significant increase in its revenue.
Whatever it takes
Amid the pragmatic steps taken by Amazon India to boost its prospects, it did not shy away from making investments wherever it was necessary. This is precisely where the other two lost the plot in 2016. As a result, while the rivals of Amazon busied themselves in making changes to their business models, Amazon invested both its time and energy in building on its excellent customer service. This paid dividends in fine-tuning its customer service and taking it to the next level.
Going Local
Unlike the other competitors, Amazon did not put a foot wrong in doing things that would make it a convenient marketplace for Indians. Acknowledging the fact that India is a cash-based economy, it offered its cash on delivery (COD) service, which enabled the customers to make payments at the time of delivery of products. Not only this, it also did other great things to customize its offerings so as to suit the habits and tastes of Indian customers.
To reach the customers located in the far-off areas, it tied up with local partners like India Post and also invested significantly in its own logistics network to deliver the products real fast. On the other hand, it also cut down the size of the app for mobile phones to fit into the memory of cheaper smartphones with lesser storage and computing capacity, used by a majority of people in India.
As for the sellers, Amazon implemented its plans to educate local businessmen regarding online selling. Moreover, it also trained and equipped them with the requisite skills to handle technology tools which would enhance their service levels and product quality. These steps went hand in hand with the other steps taken by the company at the management level to produce positive results in coming days.
Regulatory Change
As a multinational; company, Amazon knows the importance of complying with the local rules and regulations to keep the legal issues at bay. This is at best indicated by its compliance with the local rules and regulations in various parts of India. It’s not that Amazon India did not face any issue in doing so; however, the pragmatic approach adopted by the company on this front meant that it could easily overcome such issues. In a partial way, this has also helped the company to grow in India by reflecting transparency.
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