MxMIndia

Tag: amazon.com

  • The e-commerce major’s strategy for India: Stick to the concept of sister site Junglee.com

    In India, Amazon persists with Junglee in cart

     

    By Shelley Singh

     

    It’s been 16 months since Amazon, the $75 billion American e-tailer, launched a full-f ledged online marketplace in India. It’s been three months since its founder Jeff Bezos committed $2 billion of investments to its Indian operations. Even as those operations add new products, suppliers, warehouses and employees, Bezos is not letting go of the earlier life that marked Amazon’s entry into India.

     

    Amazon made a soft launch in India in February. It dusted out a property it had bought in the US way back in 1998, Junglee, and launched it in India as a price-comparison website: users could compare the price of, say, a washing machine across not just online stores but also offline ones. As it waited on regulations, as it prepared the ground for a hard launch, Amazon used Junglee to test the waters, and observe online habits of Indians. Amazon is now immersed in those waters, but it’s not giving up Junglee.

     

    In fact, it’s taking its sister site — the two share infrastructure – to the next level, tailoring it to flank its main marketplace (amazon.in). Amazon has not adopted this double-play strategy in any of its other 12 markets. It’s a strategy none of its rivals in India have adopted. “Comparison shopping sites have not worked globally,” says Niren Shah, managing director, of Norwest Venture Partners, a venture-capital fund. “But Amazon faces tough competition from local players and is now using Junglee as a flanking strategy – a test platform to try out categories and products before offering them on amazon.in.”

     

    Some of the progress made by Junglee in the past few months offers a glimpse into Amazon’s larger gameplan for it. From just Yellow Pages kind of listing and price comparison, Junglee now also enables transactions, including from websites that compete with amazon.in. From leaving the buyer and seller to connect with each other, beginning October 8, Junglee began offering them Amazon’s payment gateway to make things easier. And a big – and visible – lister of products on Junglee is its big brother, amazon.in.

     

    The Bigger Picture

    Junglee has 102,300 sellers – about eight times the number on amazon. in. Of these, only about 2,300 have an online presence and most compete with amazon.in: for example, Jabong, Myntra, Limeroad, Quikr and Lenskart (Flipkart and Snapdeal are absent). Amazon accommodates its online rivals on Junglee because it adds to its value proposition, it gives it a vantage point to observe and make some money out of them (5-15% of the sale price). For online retailers, Junglee is another window for potential buyers. In fact, a seller of baby products who did not want to be named says Junglee’s comparison-shopping feature makes “being on it a necessity” even though under 5% of his sales came from here.

     

    Of the 250,000 visitors who come to the website of online furniture retailer Fabfurnish daily, about 5,000 come via Junglee. “Our referrals have tripled in the last one year. But in absolute terms, it’s very small,” says Vikram Chopra, co-founder & CEO. “We believe Junglee will become relevant as more furniture players enter the market.”

     

    For Amit Agarwal, country manager of Amazon and who also oversees Junglee, the offline piece is what gives Junglee its main relevance. He trots off statistics: more than 90% of retail in India is unorganised; e-commerce accounts for less than 1% and organised retail is just 8% of the $500 billion Indian retail sector. “Via junglee. com, we are trying to organise retail in India, and bring offline stores to list online,” he says. “(The idea is) to eventually help consumers buy anything, anytime, anywhere and for sellers to expand their market reach.” The big marketplaces like amazon. in, Flipkart and Snapdeal allow only those sellers who are capable of doing business online. Junglee is different in that it also allows sellers who operate only in the offline mode.

     

    Typically, they are very small and uninitiated in the business ways of the Internet. Being on platforms like Junglee gives them additional reach and a feel of the online space. Say, a buyer in Koramangala in Bangalore, after some comparison-shopping on Junglee, decides to buy a Micromax A116 phone. Junglee presents him a list of sellers — online, offline and individuals – stocking this model, their prices and location. “He will be directed to online stores and physical stores in his locality (Koramangala)”, says Mahendra Nerurkar, who heads Junglee in India and reports to Agarwal. “He will have the option to connect directly with the physical store via contact details on the site.” Both Mr Agarwal and Mr Nerurkar hope, in time, such offline buyers will come online.

     

    The Amazon Picture

    Even as that happens, there’s plenty for Amazon India to leverage from Junglee. “Junglee is an ideal place for a first-time online shopper and a first-time online seller to experience e-commerce,” says Ankur Bisen, senior vice-president, retail & consumer products, Technopak, a consultancy. Adds Sanchit Vir Gogia, chief analyst and CEO, Greyhound Research: “It’s a de-risk strategy for Amazon to try out new portfolios and products before offering them on Amazon.” Mr Nerurkar says, unlike Amazon.in, Junglee shares user data and analytics with other sellers as well, via weekly reports.

     

    “This creates an open and neutral marketplace,” he adds. Last month, Junglee launched an Android app to enable mobile transactions; it claims 650,000 downloads so far. Mr Nerurkar declined to share details on business generated from the site. But what is clear is that with transactions, Junglee comes closer to amazon. in. The central difference is that in how they facilitate a transaction, amazon.in is a far more active intermediary than Junglee.Yet, Amazon does not want to mix up the two. “There are sellers with no online presence,” says Mr Nerurkar. “They can’t be on Amazon.in and Junglee is a platform for them. If you start clubbing the two, it will pollute the experience on the other.”

     

    In an online market that is expanding at rapid speed, Amazon is keeping Junglee. “Junglee was a great entry strategy for Amazon,” says Mr Shah of Norwest. “Now, e-commerce is growing in India. I don’t see them shutting it down – at least for another couple of years. After that if they don’t get traction, they could take a re-look.”

     

    Source:The Economic Times

    Copyright © 2014, Bennett, Coleman & Co. Ltd. All Rights Reserved

    Licensed to republish

     

  • As Flipkart and Amazon battle it out for control in the marketplace, it's customers who will profit most

    In ecom-land, it’s Bezos v/s Bansals

     

    By Radhika P Nair

     

    Deep discounts for customers and big incentives for merchants who sell on their marketplace are what Flipkart, India’s largest online retailer, is planning as it aims for fourfold growth in sales over the next 12 months.

     

    In the aftermath of the biggest round of fund-raising in India’s Internet industry, Flipkart and challenger Amazon plan to open more warehouses, hire in larger numbers and acquire companies with newer products or technology as they battle for supremacy in one of the fastest growing markets for online commerce globally

     

    “It is still day-one of Indian e-commerce,” said Amit Aggarwal, vice-president and India country head at Amazon. Last Wednesday, Amazon founder Jeff Bezos said he will spend $2 billion (.`12,000 crore) to build operations in India without offering a timeframe. The announcement came a day after Flipkart declared funding of $1 billion from a host of global investors.

     

    Amazon’s announcement is being viewed as the strongest call for battle between the two protagonists.

     

    This month, Amazon will add a new category and also increase the range of books and electronics – its two main product lines in India — as it powers ahead to reach sales of Rs 6,000 crore this fiscal. In the past year, 8,500 sellers have hawked their wares on Amazon’s marketplace.

     

    Flipkart, which adopted a marketplace model last year, aims to increase the number of sellers to 50,000 in the next year from the current level of over 4,000.

     

    “China’s ecommerce industry reached its inflection point in 2005 when Alibaba raised $1 billion. We believe Indian ecommerce is at that inflection point right now,” said Sachin Bansal, Flipkart’s cofounder who expects a significant chunk of the latest funding to be used to enhance services for sellers. The Bangalore company runs six warehouses and intends to open 50 more in the next three years.

     

    Amazon is also increasing its warehouse count to ten with three new ones coming up in Maharashtra’s Bhadarpur, Haryana’s Manesar and Ghaziabad in the next few months.

     

    Experts said the focus of all this splurging will be dominated by one ultimate goal, attracting more customers. “Consumers will be wooed like never before. And it will not just be in the form of discounts; the two companies will unleash assortment and services that are specifically meant to retain them,” said Arvind Singhal, chairman of retail advisory, Technopak.

     

    Merchants who do business with both companies said Amazon for now, is more focused on electronics and books. “This brings scale and helps them show customers that they can provide products at lower costs quickly,” said one person.

     

    This is exactly how Flipkart scaled up, by focusing on books initially and then on electronics. Now, fashion has become its most important category, especially after it acquired fashion portal Myntra in May, contributing to one-third of the company’s sales, said Mr Bansal.

     

    The Flipkart site will focus on fastselling fashion products that will bring in volumes, while Myntra will focus on the higher-value products and inhouse brands that deliver profits, said a senior official at Flipkart. Branded apparel can bring in margins of up to 35% while in-house apparel brands command profit margins of up to 60%.

     

    “We are here for the long term. Our aspiration is to make Flipkart a $100-billion company,” said Mr Bansal, 32, whose company clocked $1 billion in sales in March 2014.

     

    Amazon also aims to reach the milestone this fiscal. “The aim is to have a 30% market share soon,” said a senior executive at Amazon, who did not want to be identified.

     

    Flipkart also plans to get a bigger share of exclusive sales on its portal, as it did recently with Motorola phones. Last month, it started selling China’s Xiaomi phones while Amazon launched sales of a Samsung phone and Swipe’s Slice tablets exclusively.

     

    Flipkart is also actively scouting for companies to purchase. “We are looking across the board. We will acquire if we find interesting companies in wearable devices, fashion technology, mobile internet, and robotics and in other areas,” said Flipkart’s Mr Bansal.

     

    The companies are also setting aside money for hiring and for increments. “War on talent is yet to begin as both are targeting the FMCG and telecom industries,” said a consultant. Flipkart will double headcount to 26,000 this fiscal. Amazon too is expanding and pays two-year joining bonuses of over Rs 40 lakh at the top levels.

     

    “Many companies who scaled up much slower than these two have faltered before,” said Technopak’s Mr Singhal. “It is like making an entire army move in tandem. Who will get that right is what we need to see.”

     

    Source:The Economic Times

    Copyright © 2014, Bennett, Coleman & Co. Ltd. All Rights Reserved

    Licensed to republish

     

  • Flipkart.com’s founder Sachin Bansal talks about how the peculiarities of the Indian buyer have become the online store’s strengths.

    Flipkart: Making e-commerce click with an Indian flavour

    Sachin Bansal is the CEO and Co-founder of Flipkart and oversees all the customer facing activities of the company ranging from technology to marketing. He is also in charge of Flipkart’s corporate divisions which include the finance and legal departments. A graduated from IIT-Delhi with a degree in Computer Engineering, he joined Amazon.com in India in the year 2006. He left the company to set up Flipkart in 2007, and talks to Tuhina Anand about current developments and future plans.

    Q: With plans of Amazon firming up in India, how do you think this will affect Flipkart, considering the might of Amazon?

    E-commerce in India is at a very nascent stage. The industry is evolving and the growth will escalate with the entrance of serious players like Amazon. Such a development should boost the momentum that the e-commerce market is now witnessing. We do not see this impacting Flipkart’s plans to a great extent. We have met all the benchmarks that we had set for ourselves and will continue to do so in the near future.

    Q: Do you think that India is a different market and even a behemoth like Amazon can’t succeed unless it understands Indian sensibilities like Flipkart has, especially with its COD option which even FashionandYou has adopted to?

    Amazon has the advantage of being an established brand name. However, the challenges posed by the market in India are unique – from supply-chain and logistics to warehousing and payments. Any company which is starting operations in this country will have to invest time and resources to overcome challenges that most other companies operating in this space have already faced

    Q: There has been a lot of speculation on Flipkart looking for PE/VC funding. What is your response to it?

    We are not commenting on any speculation with respect to our funding.

    Q: What are some of the portfolio expansion in terms of selling that one should expect from Flipkart in the next few months?

    We have recently added categories like healthcare and personal products as well as home appliances. We will complete the entire gamut of electronics first and will then look at other categories. We will continue to add more products / selection to our existing categories as well. For example, we have recently added tablets, desktops and peripherals like printers and scanners to our computers category.

    Q: Any plans of partnering with Indian e-book reader companies to offer on Flipkart?

    We are keeping a close watch on this market and also studying similar models abroad. We will definitely give this space serious consideration when we see that the opportunity is right in India.

     

    Q: What would you say has been the reason for Flipkart’s success?

    We were confident of the space and the model we were operating in.  We continued to focus on delivering a positive customer experience by ensuring convenience and a hassle-free shopping experience at every customer engagement point, and this translated into strong word-of-mouth promotion for us.

    Our obsession with customer experience, coupled with offers, EMI options as well as setting up our own delivery network to take care of last mile delivery bottlenecks, has worked in our favour and made it easier for customers to trust us.

    What started off as a modest venture has gone on to becoming one of India’s leading online shopping destinations with 2,500 employees across the country. We are present across ten product categories – movies, music, games, mobiles and accessories, computers, gaming consoles, MP3 players and iPods, personal and healthcare products and home appliances – and are still growing. In books alone we have nearly 11.5 million titles, making us the largest online book retailer in India.

    We now have a registered user base of 1 million customers and are currently selling 22,000 items a day, clocking daily sales of Rs 1.5 crore.

    Q: Recently, the brand has been active in advertising, especially with the new TVC; what really prompted this move at this point of time? How are these TVCs being supported offline?

    While most consumers in Flipkart’s core target group understand the benefits of online shopping, such as selection, price and convenience, many are held back by apprehensions associated with online purchase of physical goods. These range from shipment of faulty products, delayed or lost shipments and the reluctance to divulge credit card details online.

    The campaign, which talks of some of our path-breaking initiatives like payment on delivery, product warranty and 30-day replacement policy, seeks to address these concerns and bring those shopping offline into the online space.

    Our national campaign on TV and print is being supported by other mediums like OOH and radio. These will be used to expand reach in markets that already have high e-commerce penetration like Mumbai, Delhi and Bangalore.