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Tech- Daily Amazon to use own Logistics Network for Product Delivery


In the next two years Amazon, the world's largest retailer, will use its own logistics network to deliver nearly every product sold on its Indian portal.

This move along with the launch of high-value products like apparel and increased tie-ups with local sellers will form the crux of the Seattle-based company's strategy to take on competitors in India, one of the world's fastest growing e-commerce markets.

"We don't want to repeat the mistakes we made in China," said Amit Agarwal, the country head of Amazon India at a three-hour meeting with about half a dozen of the company's top engineers on the last Friday of January.

Over coffee and chocolate muffins, Agarwal reassured his team that building a clear differentiation over rivals will drive the company's agenda.

"We have a lot of appetite for investment in India," said Agarwal, 40, speaking to ET about the next steps for his company. "We are very cautious when we enter a country, but when we do we are very aggressive," he said. "India is a very important geography for Amazon."

It is this focus that is driving the homegrown players, Flipkart and Snapdeal, to speed up their innovations and services.

In about seven months since Amazon launched its portal, prices have been slashed across most categories, and the leaders, Flipkart, Snapdeal and Amazon, have announced either same day or next day delivery within days of each other.

Such aggressive tactics are set to continue as the three horizontal etailers battle it out for leadership in the online retail industry that has doubled in size within a year to reach $2 billion or Rs 400 crore.

The need to differentiate has become all the more critical as their category spread becomes more alike. "In the horizontal space when even price become similar, it remains to be seen how differentiation will happen," said Ashish Jhalani, head of advisory firm eTailing India.

Earlier this month, Flipkart showed a quick peek into its strategy when Motorola decided to sell its new phone MotoG only online and only through Flipkart.

Flipkart's cofounder and chief executive Sachin Bansal said such a launch was possible as the company has built strengths in technology, supply chain and branding. In January, Snapdeal announced a partnership to sell Taiwanese firm Oplus Technology's tablet only on its marketplace.

Kunal Bahl, cofounder and chief executive of Snapdeal, said they focus on the unorganised segment in categories like apparel to offer unique products.

"In the commoditised goods, the product selection might seem similar. But beyond that 90% of the products we list is unique to our platform," said Bahl. Both Flipkart and Snapdeal expect to record sales of $1 billion (about Rs 6,200 crore) next year.

Experts said while width and depth of selection draw customers, logistics will be the key to market dominance. "The quality of logistics right from pick-up of merchandise to packing, storing, transporting and delivery will help create differentiation," said Arvind Singhal, chairman of advisory firm Technopak.

Technology innovation is also set to increase as companies begin to use data to build new personalised offerings.

Flipkart'sBansal said in the coming months the company will introduce a slew of innovations based on data. "We will tailor a customer's experience from customised website to customer support and delivery based on their past usage. The same platform will be different for each customer and this will be automatic," he said.

Snapdeal also relaunched its website, allowing customers to choose Hindi and Tamil versions. Both are also launching mobile-only features like personalised apps and location-based deals as mobile users account for up to 30% of their sales. 

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