The ecommerce market which is already expected to touch $22 billion by the end of 2015 may have just raised its stakes. In a move which takes e-commerce and digital sales to the next level, State Bank of India has partnered with Amazon.in
On May 20th, SBI and the ecommerce giant Amazon.in signed a Memorandum of Agreement to work towards creating an easier model of online transaction, ecommerce and thereby the growth of digital India. The first step in this coalition will be to identify areas of cooperation between Amazon and SBI. This merger is said to bring about efficient changes in m-commerce and ecommerce and increase the internet penetration of the country.
SBI, a multinational, public sector bank with assets of over $388 billion is the largest banking and financial services company in India. 66% of SBI’s domestic offices are present in rural areas of India, making it the most accessible bank in India.
SBI, has plans to expand to top stake holders in Indian ecommerce as a move to bring about a drastic digital change in the nation. In a report by the Economic Times, it is said that SBI is set to tie up with Snapdeal, Paypal, etc., to foray further into the ecommerce sector.
Amazon.in, on the other hand is the Indian by-product of the American digital company by the same name. Amazon’s core competencies include serving customer requirements, fulfilling orders and maintaining low costs. But its presence in India goes against its age old tried and tested methods. India, being an emergent market with low internet prevalence has always been a different experience for Amazon.
The SBI-Amazon.in partnership will work to combine the best of both the companies to benefit the growth of digital sales and commerce in India.
SBI, of late has been funding several large operations in India such as Reliance, Essars and Adanis. Now, in a move to facilitate seller financing and seller’s businesses, SBI has partnered with Amazon.in. It believes that through its large clientele and Amazon.in’s digital expertise, ecommerce will be routed out to SBI’s existing Small and Medium Sized Enterprises (SME).
The SME sector’s potential is an unsaid one but in the past years, it has also been difficult for SBI to collect returns on loans from SMEs due to economic conditions of the country. This affects SBI’s asset potential. In the long run, this MoU will only develop the sales potential of SMEs which in return will benefit SBIs assets.
Ms. Arundhati Bhattacharya, Chairman, SBI said, “As the premier Bank of the country, we are always exploring ways to fulfil the aspirations of our millions of customers. Our partnership with ECommerce platforms like Amazon would give a fillip to e-commerce in India and brings lots of value to our retail and SME customers. We are working on ways to enrich customers’ payment experience and opening up the windows of ecommerce to our SME customers. Ecommerce as an industry is at inflection point and SBI stands with all the stake holders – the retail customers, the SME clientele, the large logistics companies, others – in facilitating this defining change”.
For Amazon.in, this is a golden opportunity to reach a different audience to which it had very limited access to. SBI being the largest bank in India and a government bank will further its stronghold in the country and its outreach.
Mr. Amit Agarwal, Vice President and Country Manager, Amazon India, said, “It is still Day 1 for ecommerce in India. Amazon is committed to investing for the long term to transform the way India shops and sells, and provide customers across India with the most trusted and convenient access to the largest selection of products at great prices. Likewise, India is a land of entrepreneurs and e commence has the potential to transform the livelihoods of millions of small businesses by helping them sell nationally and globally.
In SBI, we have a fantastic partner whom customers and businesses trust through long-standing relationships, sometimes over generations. Moreover, SBI shares Amazon’s philosophy of building customer trust and investing for the long term. We have a great opportunity to work together to transform how India shops and sells.”
The prime focus of this merger is to open up ecommerce to SMEs across India. In a country as vast as India, innumerable SMEs are evidently waiting for their digital break. This will only come as good news to the existing wealth of Indian ecommerce.
“India SMEs have great products but they don’t know how to sell. They should have better selling and buying…(options),” said Ms. Arundhati Bhattacharya, Chairman of SBI.
This partnership will create awareness of safe and quick digital sales and services to sellers thereby removing the taboo of the internet and internet banking/services that is prevalent in the mind of many people across the country. Inspite of being the 2nd most populated country in the world, it doesn’t come as a surprise that the internet penetration in India is comparatively lower. The hesitation in the minds of people to use the internet should be removed in order to increase internet penetration. Through an awareness program, SBI-Amazon.in intends to do that.
This will also mean a much wider product base on the internet. In the future where internet penetration increases, competition amidst sellers will be high. But increased internet penetration will also mean increased seller base. Inevitably the ecommerce sector will see growth through ventures such as these.
Editor team is specialized in introducing the marketplace content targeting the Indian online sellers. They plan and coordinate to bring the appealing content for the small businesses on how to partner with the e-commerce sites like Amazon and Flipkart and strategies for improving their online business.
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