Amazon Alerts Indian E-tailers To Step Up Innovation

by Sohini Bagchi    Feb 19, 2014

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It is not literally that e-commerce giant Amazon.com would encourage its competitors in India to speed up innovation, but every move that Seattle-based company makes is like an ‘alert’ to Indian e-commerce players, such as Flipkart and Snapdeal, to remain competitive in the market. The recent announcement from Amazon is that the e-tailer will use its own logistics network to deliver nearly every product sold on its Indian portal.

Logistics as a differentiator

Amazon’s move along with the launch of high-value products like apparel and increased tie-ups with local sellers will form the crux of the company ’s strategy to take on competitors in India, which is one of the world’s fastest growing e-commerce markets, a TOI report suggests that this.

Amit Agarwal, country head of Amazon India told the news site that “We don’t want to repeat the mistakes we made in China and have a lot of appetite for investment in India…”  India, he believes is a very important geography for Amazon and is therefore building a clear differentiation over rivals to drive the company’s agendIt is this statement that should be enough for homegrown players, such as Flipkart and Snapdeal, and numerous others to speed up their innovations and services. experts point out that last year, when Amazon launched its portal in India, it offered a lucrative discount, slashing prices across categories. It was then that domestic e-commerce companies such as Flipkart, Snapdeal and some others started coming up with either same day or next day delivery within days.

Experts believe similarly by strengthening its logistics Amazon is again geared up for the next level of market dominance. Many believe the quality of logistics right from merchandising to packing, storing, transporting and delivery will the help of right technology will help create a strong differentiation.

Thriving on tech innovation

Amazon as a company is technically extremely adept. The company’s massive investment in technology has already been its key differentiating factor. Amazon’s Founder and CEO Jeff Bezos said in an interview with Forbes, “Much of the investment we make goes straight into technology. To Amazon, retailing looks like a giant engineering problem. Algorithms define everything from the best way to arrange a digital storefront to the optimal way of shipping a package. Other big retailers spend heavily on advertising and hire a few hundred engineers to keep systems running.”

Currently Indian e-tailers have also realized the necessity for tech innovation, especially as they begin to use data to build new personalized offerings. Snapdeal.com, has announced said that the biggest investment it is going to make in the next few years will be in the area of technology. With a strong IT team, the e-commerce provider aims to reach its target of $1 billion by 2015, riding on the IT wave.

Flipkart is also relying heavily on IT investments as Sachin Bansal, CEO and co-founder of the company, says in the coming months the company will introduce a slew of innovations based on data. “We will tailor a customer’s experience from customized 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 mentions in a statement.

Read: E-commerce Firms Ride On New IT Trends

Several other e-commerce players are looking to relaunch their websites, launching new mobile apps and location-based deals and is banking heavily on mobile and IT innovation. Experts believe emerging technologies such as social, mobile and analytics (SMAC) will not only help domestic e-commerce players in designing innovative marketing campaigns but will also helping them stay ahead of competition.