Despite fulfilling most of his ambitious targets, and creating a new phenomenon in the country's ecommerce market, Bezos faced a decidedly more bitter welcome this time around.
When Amazon founder Jeff Bezos last visited India in the autumn of 2014, he dressed up in a traditional Indian attire, and posed for pictures standing atop a truck festooned with garlands, holding a giant check for $2 billion – which he invested in his company that year. Since then, Amazon has invested an additional $3.5 billion in the country (excludes the $1 billion on his recent visit).
Six years later, as the Amazon Boss lands in the country on a three-day visit (This time too, he wore a traditional outfit – a Nehru jacket – and payed tribute to Mahatma Gandhi soon after arrival), – a lot has changed since his last visit. Despite fulfilling most of his ambitious targets, and creating a new phenomenon in the country’s ecommerce market, Bezos faced a decidedly more bitter welcome this time around. The company faced a significant swadeshi resistance by a section of India’s trade associations, small retailers and distributors, whose interests are backed by the Narendra Modi government.
But the tech mogul isn’t quite perturbed. He knows the art of selling dreams amidst the large-scale protests across the country and his company being under the lens of different regulators in India.
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Empowering Indian SMBs
On his recent visit, the Amazon founder promised to invest $1 billion to digitize India’s small and medium businesses (SMBs) in India. He made this declaration at an event called ‘Amazon SMBhav’ in Delhi that was organized to connect with small business owners in India.
Bezos said, Amazon will use its global footprint to export $10 billion worth of ‘Make-In-India’ goods across the world by 2025. “Twenty-five years ago Amazon was an SMB. Today we are announcing that we are going to invest $1 billion in digitizing SMBs.”
By announcing this, Bezos has just sold a billion dollar dreams to millions of Indian SMBs and budding entrepreneurs who can now look at selling their products across more than 180 countries where Amazon operates. Under its Global Selling Program, Amazon already has 50,000 Indian exporters who list more than 140 million products that are Made-in-India on its platform.
Moreover, about 6,000 SMBs in India export through Amazon’s International B2B program that was started in 2018. To reach the $10 billion mark in exports from India, Amazon will need more Indian exporters on its global selling program, and definitely more products. That would essentially help existing small enterprises grow faster, and create space for new entrepreneurs across India, considering a large chunk of exporters comes from tier II and III cities and towns.
Bezos also announced that Amazon plans to create one million new jobs in India by 2025 through continued investments in technology, infrastructure, and logistics network. “We are investing to create a million new jobs here in India over the next five years.”
The jobs will be across industries, including information technology, skill development, content creation, retail, logistics, and manufacturing, and are in addition to the 700,000 jobs Amazon’s investments have enabled over the last six years in India.
“We’ve seen huge contributions from our employees, extraordinary creativity from the small businesses we’ve partnered with, and great enthusiasm from the customers who shop with us—and we’re excited about what lies ahead,” he mentioned in Amazon India blog.
Needless to say, in July 2019, Randstand rated Amazon India as the most attractive place to work. According to the research, Amazon scored high on financial health, utilization of latest technologies, and a strong reputation. The company also ranked second on LinkedIn’s Best Companies in India to Work list in 2019.
Greeted with controversy
There’s no denying the fact Amazon’s aggressive expansion in India resulted in an e-commerce boom in a country where thousands of people flocked online – driven by cheap smartphones and data plans in the last few years. Also Amazon created loyal customers outside urban markets that do not have access to large retail chains. But in the process, it has also angered millions of small brick-and-mortar businesses, who believe that Amazon and Walmart-owned Flipkart dominate online shopping in the country, and that’s affecting their businesses as these giants unscrupulously lure consumers by using ‘deep discount’ on their products.
Small business owners in India have also accused Amazon of violating the country’s FDI norms. Unlike in the US where Amazon sells directly to customers besides letting independent sellers list their products on the website, in India foreign ecommerce companies function as neutral marketplaces selling only items listed by local independent sellers. Critics say that Amazon and Flipkart get around these laws by holding majority stakes in third-party brands and selling their own products through them.
A day ahead of Bezos’ arrival in India, the Competition Commission of India (CCI) ordered an enquiry into the business practices of these e-commerce majors. The regulator is probing the two local online retailers for deep discounting and preferential listings.
Bezos also faced protests from traders across several cities. Retail industry lobby the Confederation of All India Traders (CAIT) has been protesting for the past few months against ‘deep discounts’ and other schemes offered by the platforms.
Is Jeff Bezos worried?
Not really, Bezos understands the need and the way to manage angry stakeholders in an important market. The fresh $1 billion investment to help bring small businesses online is the answer to the country’s debacle with Amazon. To political authorities, Amazon would eventually demonstrate the social usefulness of ecommerce by committing to export $10 billion of made-in-India goods by 2025.
After all, the final customer isn’t complaining. He or she would rather receive a bigger discount on a new mobile phone than ask why it’s being exclusively sold online.
But more than any protests and antitrust order, the real challenge for Bezos will come from “phygital” retail, a combination of physical and digital commerce that business mogul Mukesh Ambani is currently piloting, believe experts.
“Ambani’s ambition is to link up 30 million neighborhood stores to the 360 million-plus customers of his 4G telecom network, Jio. If he can dominate grocery and fast-moving consumer goods by offering discounts, cashless payment, in-store credit and the convenience of home delivery, small shops around the country could become one gigantic storefront for his JioMart,” mentions a recent article in Economic Times.
The takeaway for Bezos is that Amazon is still operating in a space that has a minuscule presence in India, despite the huge growth potential. As we know only 7% of a $1.2 trillion retail market in the country has gone online. The real opportunity still lies in the remaining 93% of the industry that’s currently offline. That’s where Amazon needs to explore. So, should we expect a partnership between Jeff’s Amazon and JioMart going forward? Or would the retail space see new innovation and intensified competition in the days to come. We need to wait and watch out this space. Bezos too must be waiting!
(Photo courtesy: https://blog.aboutamazon.in)