Amazon enters Indian wholesale ecommerce; first mover advantage over Alibaba?

Pooja Vishant | Aug 26, 2020

Amazon is starting yet another pilot project in Bangalore, this time in the wholesale area. For the first time outside US, Amazon is launching a new website, AmazonBusiness this week to facilitate transactions in wholesale goods. Making an entry into the Indian wholesale ecommerce scene, the ecommerce giant will extend the service to other cities eventually.

“Small and medium businesses often suffered because of inefficiencies in the supplies procurement system,” said Amit Agarwal, country head at Amazon India. “Either the fill rates were poor, or the pricing was not transparent, or the delivery options were inconvenient and vendor lead time was huge. These are the problems we are looking to address.”

How will Amazon’s wholesale website work?

Scheduled to be live from the latter half of May, registered members will be able to buy products like office, kitchen and home supplies, health and personal care products, food and beverages, and so on at minimum order value of Rs 1,000. Amazon will deal directly with wholesalers in rate negotiations and sell accordingly to members.

As it would be a members-only website, initially small and medium businesses will be invited. Anyone with a valid business license like kiranas, home entrepreneurs etc. will be encouraged to be onboard the initiative. It will be modelled on the lines of Amazon Supply, which was launched in 2012 to focus on US business consumers.

Competition in Indian wholesale ecommerce

Chinese ecommerce giant, Alibaba is expected to begin operations in the Indian domestic market soon. Although it has already set up offices in India, Alibaba has not really ventured into the domestic ecommerce scene and has only worked towards connecting small and medium Indian businesses and global buyers.

So Amazon can make the most of a first-mover advantage in the absence of significant competitors.

On the regulatory front also, it’s a pretty good opportunity for Amazon as the wholesale business model is approved by the government and is a great opportunity for a player like Amazon to invest time in. More than replicating Amazon Supply, the move could be due to the thought that Alibaba’s business model can be replicated in India as well.

What hurdles could Amazon face?

Wholesale businesses in India generally work on a 30-60 day credit arrangement. So if merchants have to pay through card for their transactions, it might defer them from using the service. So flexible payment methods would be one critical point Amazon would need to address.

Also important would be to keep track of who is transacting and utilising the services. If it’s meant for businesses only, strict checks will need to be done to ensure it’s only businesses utilising services.

About Author

Pooja Vishant

Pooja Vishant

After dwindling with her family business, into travel and hospitality, for more than 3 years, Pooja Vishant found her true love in writing. Happy-go-lucky and cheerful, she loves pink; so pink is the way to go if you want to get into her good books. The Associate Editor keeps track of even a leaf that has moved in the ecommerce world!

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