Amazon cutting costs, expanding areas of operation to progress fortunes

Editor | Sep 10, 2020

Money saving is key for everyone; even for cash-strapped Amazon, which doesn’t have to worry about funds. Even as other companies like Flipkart and Snapdeal are working to reducing their expenses, raise funds and somehow turn profitable, Amazon was always considered to be safe, thanks to its huge moolah resource base in the US of A. However, the company is now working towards reducing its expenses and improving its earning capacity.

Amazon has reportedly cut down on the payout amount to its local delivery partners. The system worked like this – local stores would collect Amazon parcels. Customers who had shopped for them would pick them up from these stores. Earlier the company would pay its partners Rs. 18-19 per package. However, this figure has come down, says a partner citing anonymity,

“It has now said that it will reduce the payouts to Rs. 12-14, depending on the density of orders we process.”

An Amazon representative indirectly confirmed this

“As volumes increase, the cost structure comes down on account of economies of scale. These benefits are passed on to customers in the form of lower prices, drawing more customers to the platform (and) thereby benefiting all partners including sellers and delivery partners.”

Grocery/FMCG on Amazon’s mind

The company is also planning to widen the footprint of Pantry, its grocery delivery service. Presently Pantry works in 29 cities. Saurabh Srivastava, Director of Consumables, FMCG, Amazon India said,

“The top cities have been covered, and the adoption has been good for the overall FMCG segment.”

Amazon is also planning to build more warehouses to support Pantry.

“We have to create fulfilment centres or warehouses having stocks that people of a particular city want,” said Srivastava.

It is also going to go into physical food retail shortly. The company is also seeking FDI approval to launch its ‘farm-to-fork’ idea where buyers can purchase produce fresh off the farms.

While Amazon’s losses are high, the company isn’t too worried. However, IOS had reported that demonetisation did have its impact on the company’s Platinum Seller Program. Demonetisation had also prodded logistics companies like G4S (which provides last mile delivery to ecommerce partners) to stop servicing Amazon due to non-viability.

Companies are frantically trying to save money by firing staff en-masse to shrinking their office spaces. Will Amazon’s plan of exploring lucrative options be a better bet?


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