How Amazon India Is Changing The Rules Of The E-tailing Game

The global e-commerce giant Amazon entered the Indian terrain about a year ago in June 2013. Since then, a lot has changed in the e-tailing space of the country. Being an experienced player across many countries in the online space, Amazon has brought lot of expertise to the Indian online marketplace, pushing the native players to evolve and change swifter.

Within a couple of years, Amazon has launched a mobile retailing app and now covers 20,000 Pin codes, which is more than any other online retailer does in India. As per analysts, these major steps are aimed at a long-term model where Amazon can maintain its own inventory of products belonging to different sellers without actually relying on last-minute delivery by sellers through logistics companies.

The Indian online retail pie
The Indian online retail pie is not really huge at the moment with an estimated size of $ 2.3 billion, which is 0.4% of the total retailing industry in the country. But the growth of online retail is impressive and the industry is expected to reach the size of $32 billion by 2020 - a significant 3% of the total retail industry. Certainly, this kind of an amazing growth and potential is fuelling the e-tailers in India to go all over. Amazon India is no different and has been on its heels to revolutionise the entire Indian e-tailing space.

Preparing and readying stakeholders
Amazon is quite serious about India and is investing time, effort and money in building up various aspects of the industry, so that it is better prepared to manage the rapid growth. Amazon India has recently tied up with Catamaran - a sign that global giants are taking Indian e-commerce a lot more seriously.

Amazon Asia has partnered with Narayan Murthy’s private investment firm Catamaran Ventures to create a new entity which will focus on prepping up sellers and small and medium businesses to go online. This entity, named Taurus Business And Trade Services, will offer its services to the offline sellers and SMBs in the country and make them ready and to go online. The company will offer its services in key Indian cities and towns and will train offline sellers and small and medium businesses in online tools, so that they can expand their online customer base. This step will not only build up the other stakeholders of this industry to grow, it will also help in supporting the huge growth more strongly and benefitting out of it.

Consolidation
Another big impact made by Amazon in Indian e-tailing space is in the form of kicking consolidation big time. Experts say that with a big player like Amazon getting serious about Indian market, it is forcing others (big or small) to up their arsenal so they can stand up to this global giant. In such a scenario, increased and big buzz consolidation is the way to go and that’s what the online retails space has witnessed strongly, especially in the last one year.

May 2014 witnessed one of the biggest consolidations in this space so far when one of the biggest Indian e-tailer, Flipkart, acquired the fashion retailer Myntra in what is said to be a whopping Rs 200 crore deal. It is interesting also to look at how the number deals and their total amount in the online retail space has changed in the recent years. In 2012, this space saw about 73 deals worth @371 million. In 2013, the number of deals went to 60, with total deal amount adding up to $592 million. This year, just till May, the industry had seen about 20 deals with a whopping aggregate value of $637 million.

Clearly, the industry has been able to harness bigger amount for the deals. This shows that the investors are ready to spend big bucks on the e-tailers, provided they are promising. At the same time, very small players are finding it difficult to attract investment as due to the consolidation, investors are narrowing their attention to the mid size and biggies of the industry.

Simply stated, big firms in the industry are zeroing in on small ones to increase their presence, reach and portfolio in the market. This helps in creating scale and the companies and the customers, both will benefit from this.

Competition
With the rate at which Amazon India is expanding its reach as well as portfolio along with its innovative services, there is a lot of stirring up in the industry and the competition is getting fierce. In December 2013, Amazon introduced in-a-day delivery service, which pushed other key players, including Flipkart and Snapdeal to launch the same in order to stay in the game.

Another unique service that the company has currently launched in select cities is customer pick up facilities from select pick up points. Yes, just like a ‘take away’ food model, Amazon is out there trying to enrol kiranas as delivery points. In select cities, the e-tailer has enlisted some of the mom and pops stores as the pick-up points for customers. The product will be shipped to these stores and the customers can pick up their deliveries. This would help in expanding the reach of customers and manage the failed delivery problems.

Amazon has become the trendsetter in online retail market, forcing others to pull up their socks and deliver better. This is changing the rules on the e-tailing game with companies being forced to become more agile and proactive and customer service becoming more effective.