Amazon India expands logistics footprint to 2,100 urban centres.
The online marketplace is betting big on fast and reliable delivery of products to gain a big share of the market.
Bengaluru | Red Newswire | by Mihir Dalal @Livemint | Dec 22,2015 01:42 AM IST.
The logistics footprint of Amazon India grew three times to more than 2,100 cities and towns in 2015 as the online marketplace invested hundreds of crores of rupees to make its delivery service a key differentiator.
Its famed customer service helped Amazon gain market share from local rivals Flipkart Ltd and Snapdeal (Jasper Infotech Pvt. Ltd) over the past year.
Since Amazon.com Inc. chief executive Jeff Bezos promised in July 2014 to invest $2 billion in India over time, the company has pumped in more than $700 million into its operations here, regulatory filings show.
Amazon is desperate to become the market leader in India, the last large unconquered market in the world, after it lost out in China to local rivals.
One of the key areas of investment for Amazon India is supply chain and logistics. Amazon, which delivers to more than 19,000 postal areas in India, also added eight warehouses this year, increasing its count to 21. It has the most warehouses and storage space among e-commerce firms in India, ahead of Flipkart, which has 17.
Because of its fast supply chain expansion, more than 90% of Amazon’s 52,000 third-party sellers use its logistics service, Fulfilment by Amazon. With this service, which is a mix of Amazon’s logistics network and that of external logistics firms, the company is able to ensure fast and reliable delivery of products.
“In 2015, (fast and reliable delivery) has come out as a key thing that separates Amazon from others,” Amazon India country head Amit Agarwal said in an interview. “If you look at Diwali, many customers made this observation that Amazon is fast, Amazon is reliable. During our Diwali sales, customers opting for paid delivery grew 300% over last year. We have the largest in-stock selection in India that is available for fast delivery. More than 70% of our demand is eligible for fast delivery. We see the right metrics internally and on customer adoption.”
Since launching in India in June 2013, Amazon has applied its mantra of low product prices, wide product selection and fast and reliable delivery to gain popularity with shoppers.
Amazon Seller Services Pvt. Ltd, the locally registered entity of Amazon, offers more than 40 million products across more than 35 categories, including phones, electronics, apparel, toys and other products.
Among e-commerce companies, Amazon has spent the most on advertising and marketing its brand this year. The spending seems to have worked. Earlier this month, Amazon said it was the most visited website in the key festival month of October, ahead of Flipkart and Snapdeal, citing data from analytics firm comScore Inc.
To be fair, Amazon’s leadership on desktop has something to do with the fact that market leader Flipkart has almost enti-rely shifted its focus to mobile, given that the smartphone will be the primary shopping device of a majority of new Internet users over the next few years.
Even so, the numbers indicate the huge strides Amazon has made in India over the past 30 months. Its mobile business is growing rapidly, too.
Agarwal said app downloads for Amazon, which gets more than 70% of its traffic from mobile customers, jumped 230% in October, compared with last year. The company’s active user base increased by the same amount in the month, reflecting the increased product selection that Amazon offers.
“Our fastest growing category has been fashion that has seen growth of anywhere between 500% and 700% this year. Of late, we have been seeing a lot of growth in consumable and home appliances and home furnishings. Gift certificates is another category that is growing more than 500%. We are seeing growth across categories, but these are the few categories that are growing disproportionately faster,” Agarwal said.