Amazon’s $3 billion investment in India unit has increased pressure on rivals Flipkart, and Snapdeal. But we wonder as to when, how and where the American etailer will utilize the funds.
When asked directly how the funds will be allocated, Amit Agarwal, Vice President and Country Manager, Amazon India said,
“We don’t talk about our future plans but the investment will go towards enhancing our customer and seller experience, as we have done over the past three years. India is a key geography for us and we will continue to invest in the country with a very long-term horizon.”
No more ‘big’ discounts- hands are tied
The mystery or curiosity around fund utilization is because of the recent ecommerce policy changes implemented by the government.
In the last three years, Amazon has spent unabashedly on discounts and advertisements, which also earned the marketplace the title of ‘biggest spender’. But after the discount block, the etailer has refrained from hosting big sale events until the government provides clarity on advertising discount and promotion rules.
However, regular sales will continue to happen.
“We have occasionally done sales events, and I don’t think that will change,” said Agarwal.
So where will the $3 billion go?
“In general our approach has been to focus on things that matter to customers and don’t change with time. Vast selection, low prices and fast delivery… Our deep paranoia that a customer doesn’t find the best shopping experience elsewhere is core to how we approach our daily jobs”, shared Agarwal without revealing details. Yes, customer at the centre again.
Industry experts feel that Amazon will use the $3 billion to improve its logistics and supply chain. Based on several reports, the marketplace might work on:
- Fine-tuning last mile delivery
- Opening more warehouses
- On-boarding, enabling and training more sellers
- Expanding product portfolio while keeping prices low
- Enhancing customer’s shopping experience
- Convenient payments method including mobile transactions
- Lower cost of operations for sellers
“Discounting was never a way to make customers stick to a portal but we all had it wrong. The first wave of money was wasted in doling out discounts. Now, I think, most of the monies would be used in precision analytics, bulking up logistics and making customers realise a particular e-commerce portal is all they need for almost all their needs,” revealed an ecommerce company’s senior manager.
Better late than never!