Amazon India Expansion: Amazon is constantly looking to improve its global profile and sales, so naturally, the company has been trying to branch out to India, where a high population could lead to major profits.
In an effort to expand in India, Amazon plans to add more fulfillment centers while expanding back-end services in India through a larger logistics team. In doing so, they aim to boost Amazon Prime subscriptions as well as expanding product availability.
India is the second-most populated country in the world according to census.gov and Jeff Bezos and Co. see a ripe opportunity to develop the company’s customer base in a potentially massive fashion.
As retailers like Walmart have attempted to up the ante and compete with Amazon on a global scale, the Seattle-based online retailer has made an effort to increase its customer base and product availability – which should help expand the market for third-party sellers.
How Will Amazon Expand in India?
While Amazon already has a fair amount of fulfillment centers stationed around India, Akhil Saxena, Vice President at Amazon India, told the Economic Times that the number of centers is set to jump immediately.
“We will expand the number of fulfillment centers to 67 from 41 last year with combined storage space going up from 13 million cubic feet to 20 million cubic feet. Next we would work on organic growth of our back-end such as expansion of logistics to be fully ready for the festive season.”
In an effort to do this, Amazon has partnered with multiple Indian couriers as well as expanding their own localized courier services for optimal product transportation.
“While we will work with other service partners, Amazon Transportation Services will be the largest logistic partner,” Saxena explained.
Considering that India is relatively centralized between Europe and Asia, having multiple fulfillment centers there could help them reach nearby countries more efficiently. Additionally, due to having very densely populated cities, Amazon’s India-based fulfillment centers will potentially be able to reach more customers, which would be very cost-efficient for the company.
Currently, Amazon has around 350 delivery stations, but will make an effort to boost that number by the end of 2018.
Amazon’s top online retail competitor in India, Flipkart, was recently acquired by Walmart in an effort to compete with Amazon’s global sales presence. While Amazon was considered at one time to be a potential buyer as well, Walmart outbid them in offering Flipkart a reported $16 billion.
As the race heats up between the American retailers, it is assured that Amazon will be making major waves in India in the near future. Sellers should continue to monitor Amazon’s presence in India and should inquire about how to get their products into the 20 million cubic feet of storage as well as how to properly market their products to Indian consumers.
How Does Prime Day Affect the Indian E-Market?
Amazon India Expansion: Another way Amazon hopes to develop a presence in India is through honoring Prime Day throughout all of the country. While the massive demand of events such as Prime Day in India have caused other e-retailers to experience website crashes or application failures, Amazon’s servers are more than powerful enough to handle the vast amount of traffic.
In an interview with Quartz Media, Saxena explained the benefits that Amazon India received on “Prime Day” in 2017.
“On Prime Day last year, we saw more members shop than on any other day before that. Each customer bought more than three times their usual shopping amount. And we also saw more people subscribing to Prime membership in the week leading up to Prime Day than any other week prior to that,” Saxena explained.
Saxena also detailed how Amazon chose to capitalize on what they learned from 2017 and apply it to 2018 and beyond.
“Last time, we got 30 brands to partner with us to launch products exclusively. We got a very positive response to these launches. So, this year we have 10 times more launches planned with over 200 launches. For instance, Nestle is releasing a new line of cereals, Bosch is launching new microwaves and Marks & Spencer has a new line of dressing being unveiled during the Prime Day event. Also, OnePlus is launching its red variant for the OnePlus6, which is a really hot property. In addition, 18 startups are launching new products during the event.”
Based on that quote, it is obvious that Amazon has taken advantage of the increased market that this annual event draws. While it seems like large-scale third-party sellers benefit most from this, sellers on a smaller scale should consider following a similar model in 2019 with releasing new products at a discounted rate.
Amazon doubled down on making sure that Indian customers knew what they were buying by setting up virtual reality pop-up shops in 11 malls in 5 different cities for Prime Day.
“How do you discover 200-plus products that are not in the market yet?” Saxena said. “Last year, customers told us ‘we loved the stuff when we got it but we were wary while buying it since it was not something we’d ever seen.” So now with VR [virtual reality], people can see the products in their true form factor. They can see how a microwave is going to look on a countertop and how a dress looks on a model. You can see jewelry up close and observe it in great detail.”
Knowing that customers will be much more likely to buy products if they can see what they are buying should suggest to sellers that they need to make sure their products are properly optimized for Amazon’s virtual reality applications.
Amazon India Expansion: Pharmaceutical Sales in India
Just weeks after announcing the acquisition of PillPack, Amazon is reportedly in talks to purchase the second biggest pharmaceutical chain in India, Medplus.
“There have been preliminary discussions between Amazon and Medplus… Too early to call it a deal. But what’s confirmed is Amazon’s serious intent to build a definitive pharmacy lay in India,” an inside source told Factor Daily.
Medplus was founded in 2006 and currently operates upwards of 1,400 stores in 12 Indian States, which suggests that this would be a major acquisition regarding the Indian economy if Amazon lowers prices.
“There are active conversations going on with potential pharma chains… with at least two of them. One of them is Medplus,” another source told Factor Daily.
This is particularly interesting because it suggests that Amazon wishes to weigh the options and may take some time to decide on which new deal they will make.
After hiring former Harvard surgeon Atul Gawande as the chief executive for Amazon’s healthcare venture with Berkshire Hathaway and JP Morgan in June, Amazon made a big splash with PillPack that cost major American healthcare companies upwards of $12 billion in stock on the first day.
It is unclear at this time exactly what function PillPack will serve, but acquiring Medplus could be another piece of the puzzle in Amazon’s master plan for global pharmaceutical dominance.
As the Amazon India expansion continues into the healthcare industry, sellers of pharmaceuticals should be considering contacting Amazon so that their products hit the shelves before their competitors.
Cyril Zackary Penn IV is a soon-to-be graduate of Hofstra University with a Journalism degree from Sonoma, California. He started his own blog in high school and has been writing about sports, news and entertainment since. He is currently a staff writer at AXcess Baseball as well as the Hofstra Chronicle and formerly was the Sports Editor at Man of the Hour Magazine.