How Amazon has survived—and thrived—in the Indian market

Amit Agarwal, senior VP and country manager, Amazon India, has customers at the core
Image: Nilotpal Baruah

In mid-2014, when Amazon started its business in India, it was a tripartite battle for supremacy in the country’s fledgling ecommerce sector, along with Flipkart and Snapdeal. The homegrown rivals claimed to have the first-mover advantage and know the Indian terrain much better than the Seattle-headquartered company.

Five years on, Amazon has survived, thrived and earned a loyal customer base. Snapdeal has fallen by the wayside while Flipkart was bought by Walmart. The Forbes India-TRA Research study puts Amazon as the most respected internet brand among working millennials. Overall, it is third on the list.

“Amazon has customer obsession as its core; we put all our energy behind things that matter the most to customers, which are selection, pricing, and fast and reliable delivery. We believe that as long as we deliver on these, customers of all ages will continue to choose us,” says an Amazon India spokesperson on email. “Three principles—obsess about customers, invent on their behalf, and think long term—sum up our culture of innovation. We will continue to invest in the country and are excited by the foundation that we have built.”

Amazon India has been working steadily towards this goal, be it with a fulfilment and logistics network that ensures timely delivery, or a Hindi version of its website and app to attract India’s regional language-speaking populace.

Its Prime subscription service, which offers free and fast delivery apart from a vast library of video and music content, has also been instrumental in cementing Amazon’s position in India, say analysts.

“Prime has played a major role in strengthening Amazon’s stand in the metros and beyond. Prime customers are loyal and order more frequently across more categories. Also, there isn’t a competing product in the market,” says Satish Meena, senior forecast analyst at Forrester, a market research firm.

Amazon hasn’t balked at investing in India. It has infused at least â‚ą33,000 crore into its business here, apart from buying stake in brick-and-mortar companies to supplement its online play. For instance, it has stakes in fashion store Shoppers Stop, a category where it lags Flipkart, and supermarket chain More to bolster its grocery delivery business. Its payments arm, Amazon Pay, is also growing briskly while a food delivery service is on the anvil.

Yet, there are challenges ahead. The India business is a capital guzzler, with profitability nowhere in sight. In FY19, Amazon Seller Services, its marketplace entity, and Amazon India Wholesale, the wholesale arm, posted total losses of â‚ą5,800 crore on revenue of about â‚ą11,800 crore. Flipkart continues to be a formidable rival in the retailing business, while the payments business faces rivals such as Paytm, Google Pay and PhonePe, another Flipkart subsidiary.

A focus on customer experience, says Meena, has helped Amazon cement its position in India. “They have a better perception among customers, especially in the top 15 to 20 cities, ever since they started. They have built on that trust,” says Meena.