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 Online shopping is booming in India, where millions of consumers are
newly able to access the Internet thanks to cheap smartphones. For
Amazon, it is already the largest contributor of new customers
outside the United States.
But, like local rivals Flipkart and Snapdeal, Amazon has struggled
with deliveries in cities where snarl-ups are frequent and road
signs unreliable. In response, firms have set up logistics networks
and use motorbikes instead of trucks.
Flipkart, for one, has tapped Mumbai's dabbawalas, a more than a
century-old lunch box distribution service.
More than two years on from its arrival in India, Amazon says it is
now ready to apply some of the innovations applied here to markets
including the United States, Mexico and Brazil.
Britain, for example, could get a delivery service called Easy Ship,
where orders are picked up by Amazon's crew directly from sellers,
cutting out the time and cost of sending goods to a warehouse and
the need for more space.
"It's not just that we learn from the big brothers like North
America," Akhil Saxena, director of operations at Amazon India said
in a recent interview at the company's local headquarters in the
southern city of Bengaluru.
"There is so much focus on India and the kind of growth that is
happening here... People say, if it works for them, let's see what
we can pick and learn," said Saxena.
E-commerce in India could grow to $137 billion by 2020 from $11
billion in 2013, says Morgan Stanley, and firms like Amazon, local
market leader Flipkart and rival Snapdeal, backed by Japan's
SoftBank <9984.T>, are fighting for a bigger share.
Speedy and cheap delivery is critical to winning over customers in a
cut-throat industry, where heavy discounts mean firms are already
burning through substantial cash to grow.
Harish Bijoor, an independent brand expert and business analyst,
said the innovative delivery services were helping Amazon extend its
reach in India, even at the cost of giving up some control over
logistics - a lesson it could export.
"E-commerce is a trust business today and without that you cannot
achieve scale," Bijoor said.
MADE IN INDIA
Unlike in its other markets, government restrictions on foreign
investment mean Amazon operates in India purely as a marketplace,
rather than hawking its own goods. That tightens its relations with
a multitude of sellers, and underlines the need to keep those
connections simple.
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Launched in India in 2014, Easy Ship, for example, cuts out costs of
storing, packing and separately shipping goods.
"This probably cuts your overall transportation cost at least by
half," said Samuel Thomas, Amazon India's director of
transportation, adding that it trains sellers to provide the
service, now used by 30,000, or more than 75 percent of them.
Another service introduced in India in May and considered for export
to other markets, Seller Flex, allows sellers to have the
flexibility to store goods and ship them to customers on their own,
instead of routing them through Amazon.
Amazon provides technology and training to ensure goods are packed,
labeled and delivered as the company would.
While Amazon in developed markets may not want to tweak its model
for best selling goods, analysts said, it could consider the
made-in-India seller solution to cut down on warehousing and
delivery costs for thousands of "non core" products which are
offered, but infrequently bought.
"Amazon is becoming a lot more flexible about how it services its
customers," said Neil Saunders, at UK-based retail research firm
Conlumino.
"If you go back about five years ... it was fairly one-dimensional.
Now you have Amazon Prime, in some cities you have same day
deliveries, a couple of hour deliveries ... And this is part of
that."
(Editing by Clara Ferreira Marques and Mike Collett-White)
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