Strategize, Customize, Localize – How Amazon Succeeded in India

Strategize, Customize, Localize – How Amazon Succeeded in India

Strategize, Customize, Localize - How Amazon Succeeded in India

This is a paper presented by Sumant Vidwans, a recent graduate of both the Global Digital Marketing and Localization Certification (GDMLC) program. This paper presents the work being produced by students of The Localization Institute’s Global Digital Marketing and Localization program. The contents of this paper are presented to create discussion in the global marketing industry on this topic; the contents of this paper are not to be considered an adopted standard of any kind. This does not represent the official position of the Brand2Global Conference, The Localization Institute, or the author’s organization.


Introduction

 

Amazon Inc. is one of the biggest e-commerce companies in the world, and India is one of the largest, and the fastest growing, e-commerce markets; so it was no surprise when Amazon decided to enter in the Indian market in 2013.

Flipkart (founded in 2007) and Snapdeal (founded in 2010) dominated the Indian E-Commerce market at the time. Both of them continued to grow with several acquisitions and investments by global venture capital firms.

Strategize, Customize, Localize - How Amazon Succeeded in India

However, despite all challenges and competition, Amazon still succeeded to become the biggest ecommerce company in India in just 5 years. How did Amazon achieve this amazing feat? Let’s take a look.

Overview of the Indian market

 

India’s e-commerce market was worth about $3.9 billion in 2009, which grew to approx. $24 billion by 2015, $30 billion by 2016 and $38 billion by 2018. It was recognized as the fastest growing industry in India. It is estimated to reach $99 billion by 2024, and $200 billion by 2027.

India also has few unique peculiarities that are different from countries like the USA where Amazon was founded. With approximately 65% population under the age of 35, and approximately 80% of people owning cell phones, India has always been a mobile-first country. Approximately 70% people live in small towns or rural areas and until 2016, only 35% of the population had access to the internet. This number has now increased to 50% in 2020, but India still ranks at 110 in terms of Internet Users Percentage whereas the top 5 e-commerce markets are far ahead: China (ranked 98), USA (14), UK (19), Japan (25) and Germany (38).

With only 4.2% credit card penetration until 2015, India was also the world’s largest cash-based economy. For online businesses like Amazon, this meant that cash on delivery was the preferred mode of payment for most consumers. The risk associated with online payment transactions, and the overall suspicion about paying for a product without physically seeing it or ensuring its quality might also have discouraged people from actively using the online shopping services. On the other hand, retailers largely believed that e-commerce was very complicated and time consuming. Due to this, very few retailers sold their products online.

There were also some regulatory challenges. India had enacted a strict policy against Foreign Direct Investment (FDI), which restricted foreign multi-brand retailers from selling directly to consumers online. This would basically mean that if a foreign company like Amazon wanted to sell online in India, it could only conduct business as a third-party reseller for Indian products.

Amazon’s Journey in India

 

These challenges required Amazon to innovate its business model to operate in India. And Amazon did exactly that. It chalked out a strategy, customized its business model, and localized its operations to succeed in India.

Because of the FDI restrictions mentioned above, Amazon started its operations as an online marketplace that connected sellers and buyers in India.

Custom domain name for India

The first step was to launch a website in 2013 with a custom domain name, www.amazon.in, for India. This was not a big deal, but convincing retailers to sell their products on Amazon Marketplace was definitely a challenge.

Amazon Chai Cart

Strategize, Customize, Localize - How Amazon Succeeded in India

To resolve this, Amazon started an innovative program called “Amazon Chai Cart” which was basically a mobile tea cart that would navigate city streets serving refreshments to small business owners; and a team of Amazon members would explain to them about how to sell their products on Amazon. The slogan in Hindi was “Chai to hai Bahana, Maksad hai apka vyapar badhana”, which roughly translates to “The tea is just an excuse, our aim is to help grow your business”. The ‘Chai Cart’ reportedly covered approx. 15,000 kilometers in 31 Indian cities and engaged with over 10,000 sellers.

Amazon Tatkal

Strategize, Customize, Localize - How Amazon Succeeded in India

Another similar service was launched in 2016 which was named “Amazon Tatkal”. It was a specially designed studio-on-wheels that traversed across India with an aim to engage with thousands of entrepreneurs, manufacturers, artisans and sellers. It offered a suite of launch services including registration, imaging and cataloging to enable them to register on Amazon on-the-spot and start selling products in real time. (Tatkal is a Hindi word which means ‘immediately’ or ‘on-the-spot’ in this context).

 

 

Shipment and Delivery Solutions for India

In the USA, Amazon uses a centralized shipping platform called “Fulfillment by Amazon” (FBA). Under this, the sellers send their goods to Amazon warehouses (known as fulfillment centers) and pay a fee to store, pack and ship their products.

Amazon also established its fulfillment centers in India and it has about 21 warehouses across the country. But, it also went a step ahead to help sellers with shipment and delivery in a diverse and complex country like India. For this, Amazon launched two India-centric programs called ‘Easy Ship’ and ‘Seller Flex’ in 2014 and 2015 respectively.

Under Easy Ship, Amazon picks up orders from sellers’ doorsteps and feeds them into the Fulfillment By Amazon (FBA) channels.

Under Seller Flex, Amazon provides training to sellers to help bring their warehousing practices to the level acceptable to Amazon. It provides technical support, tools and processes for 50 such warehouses owned and operated by its sellers. The vendors designate a section of their own warehouses for products to be sold on Amazon India, and then Amazon coordinates delivery logistics.

Strategize, Customize, Localize - How Amazon Succeeded in India

Amazon also has contracts with major delivery services including India Post, and the cargo airline Blue Dart. It also set up a subsidiary in India called Amazon Transportation Services Private Limited. It even utilizes bicycles and motorbikes for last mile delivery.

Partnerships and collaborations

In 2014, Amazon Asia partnered with Catamaran Ventures to jointly form ‘Cloudtail India’ to sell items such as books, phones and exclusive Amazon merchandise on Amazon.in. Within a short time, it became the largest seller on Amazon India and accounted for approximately 40% of Amazon’s sales in India.

Amazon has also partnered with approximately 20,000 Kirana stores (mom-and-pop grocery stores) in India to provide assisted buying services. People can go to these stores to browse Amazon’s products online and place orders with the store owners, who record the orders, inform customers when the product is available for pick-up, collect cash payments and pass it on to Amazon for a handling fee. This arrangement is especially helpful for people with lack of access to the internet or online payment options.

Technology and R&D

Amazon also customized its offerings to overcome the technological challenges in India. Considering that over 500 million people used basic feature phones with slow network connections, it designed a slimmed down version of it’s shopping app. This lite version uses less storage space and runs smoothly without lags even on slower 2G networks.

Locating addresses is another monumental challenge in India. Amazon uses AI and machine learning to improve delivery precision with a 0-to-100 confidence score for addresses.

One more problem in India is about fake product reviews, fraudulent transactions and fake products. Amazon has designed algorithms to tackle this problem.

Amazon also established an R&D center in Bangalore. This is Amazon’s largest R&D center outside of Seattle. This is expected to help Amazon better understand local nuances and create innovative solutions for better user experience in the Indian markets.

A Customized Pricing Model for Amazon Services in India

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Amazon also offers a different pricing model for its services in India as compared to the USA. Indian consumers can sign-up for annual Prime membership by paying just 999 INR (approx. $14 USD) which costs $119 in the USA. It also includes prime video and prime music services with a large repository of movies and music albums in Hindi and other Indian languages.

Similarly, a monthly subscription for Audible Gold Membership costs $14.95 in the USA (approx.1050 INR), but only 199 INR in India (approx. $3 USD). To attract Indian listeners, it also offers several audio books in Hindi. A Kindle Unlimited subscription that costs $9.99 in the USA (approx. 700 INR) is only 169 INR in India (approx. $2.7 USD) and has many books in Hindi and other Indian languages.

These customizations may not be the main drivers for Amazon’s success in India, but they help Amazon to a large extent in gaining an edge over its competitors who are still struggling to come up with competing services or additional benefits to attract more customers.

Localized versions of Amazon India website and app

In 2016, Indian language internet users (234 million) surpassed the English language internet users (175 million) in India. As per a report published by Google and KPMG in 2017, it was estimated that the number of Indian language users on the internet will be 2.5 times more than the English language users in India by 2021. The trend clearly suggests that Indian languages are becoming increasingly important in India’s internet landscape.

Amazon has also localized its India website and app, not just in terms of look and feel, but also in terms of the UI language. In 2018, it launched a Hindi version of its website and app. As of October 2020, Amazon.in is available in Hindi, Tamil, Telugu, Kannada and Malayalam languages.

Strategize, Customize, Localize - How Amazon Succeeded in India

Conclusion

 

Amazon’s success in India is largely because of its strategy, innovation, customization and localization of its services and operations in India. Aggressive advertising might have also helped partly in promoting the Amazon brand in India.

Relaxation of laws around FDI and active push for cashless transactions by Government of India, along with rapid improvements in 4G network services and the telecom pricing war fuelled by Reliance Jio that resulted in increased affordability of smartphones and 4G internet in India have also played a significant, although indirect, role in Amazon’s success.

At the same time, Amazon’s rivals Flipkart and Snapdeal also faced some challenges. Flipkart was trying to move from retail to Marketplace, become a mobile-only platform and build a large advertising business, while Snapdeal struggled with lack of logistic services and high-quality customer service to compete against Amazon. In 2018, Flipkart was acquired by Walmart, which also resulted in some organizational and operational changes, which might have slowed down its growth.

But as these competitors continue to resolve their internal problems and improve their services, they might again become a challenge for Amazon in future. E.g. Flipkart has recently launched its loyalty service called ‘Flipkart Plus’, and although it’s nowhere near the Prime benefits offered by Amazon, but it’s a clear indication that these companies continue to innovate and could again become a threat for Amazon in future. Although, it might take some time before they can pose a real challenge to Amazon.

In any case, continued innovation, improvements in customer service, support for sellers, and more efficient use of AI and Machine learning seems to be the major factors for Amazon to ensure its long-term success in India.

Author Bio:

Strategize, Customize, Localize - How Amazon Succeeded in India

Sumant Vidwans (BCA, MSc (CS), MCA), started his career in 2006 as a freelance writer & translator in India. He co-authored a book on Oracle RDBMS in Hindi (published in 2009) and has translated or edited more than 20 books in English, Hindi and Marathi. From 2011 to 2016, he also worked extensively with more than 100 translation agencies and companies around the world on localization projects for websites, software applications, mobile apps, games, user manuals and documents. Since 2016, he works full-time as a Language Manager for one of the world’s largest social media companies. Before moving to the USA in 2017, he has lived in India and Singapore. He also holds a professional Certificate in Internationalization and Localization offered by University of Washington in collaboration with edX.

Connect with Sumant:

Connect with Sumant on LinkedIn

Email: Sumant[at]sumant.in

This course helped me gain useful insights about Digital Marketing and Localization. The content is very relevant and covers several important aspects. It also includes multiple examples and resources which are really helpful. All quizzes are very interesting and helpful in self-assessment.
This course could be relevant for a wide variety of people including business owners and entrepreneurs who are looking to enter into new markets, as well as translation agencies who are looking for more insights and data to help their clients make more informed decisions about the need and potential impact of digital marketing and localization to expand their business
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References:

  1. https://www.aboutamazon.com/
  2. https://www.aboutamazon.in/
  3. https://en.wikipedia.org/wiki/E-commerce_in_India
  4. https://en.wikipedia.org/wiki/Amazon_(company)
  5. https://en.wikipedia.org/wiki/Flipkart
  6. https://www.forbes.com/sites/mohanbirsawhney/2018/04/30/7-ways-that-amazon-is-winning-by-acting-glocally-in-india/#5fae120261c1
  7. https://www.livemint.com/Companies/zs1JqXLNTv7ML2xeE9joRL/The-rise-and-rise-of-Amazon.html
  8. https://hbr.org/2016/07/how-amazon-adapted-its-business-model-to-india
  9. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/flipkart-is-no-1-in-india-but-faces-formidable-foe-in-amazon-say-experts-54083920
  10. https://www.cnn.com/2020/01/15/tech/jeff-bezos-amazon-india/index.html
  11. https://www.internetlivestats.com/internet-users-by-country/
  12. https://www.statista.com/topics/2157/internet-usage-in-india/
  13. https://www.business.com/articles/10-of-the-largest-ecommerce-markets-in-the-world-b/
  14. https://blog.aboutamazon.in/india-innovations/empowering-sellers-to-go-online-the-amazon-way
  15. https://services.amazon.in/resources/seller-blog/amazon-chai-cart-won-gold.html
  16. https://sellercentral.amazon.in/gp/help/external/help.html?itemID=201379690
  17. www.flipkart.com
  18. www.amazon.in

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Disclaimer: Copyright © 2021 The Localization Institute. All rights reserved. This document and translations of it may be copied and furnished to others, and derivative works that comment on or otherwise explain it or assist in its implementation may be prepared, copied, published, and distributed, in whole or in part, without restriction of any kind, provided that the above copyright notice and this section are included on all such copies and derivative works. However, this document itself may not be modified in any way, including by removing the copyright notice or references to The Localization Institute, without the permission of the copyright owners. This document and the information contained herein is provided on an “AS IS” basis and THE LOCALIZATION INSTITUTE DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY THAT THE USE OF THE INFORMATION HEREIN WILL NOT INFRINGE ANY OWNERSHIP RIGHTS OR ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

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