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Sunday, April 27, 2014

Amazon takes kirana route to deliver goods

BANGALORE: E-commerce giant Amazon, whose founder and CEO Jeff Bezos recently spoke of the possibility of drones dropping goods to US homes in the near future, is embracing the neighbourhood kirana store to push the delivery advantage in India.

This week in Bangalore, Amazon, in what's a first in India, started piloting the concept of enlisting kiranas as delivery points. The move can help it overcome the problem of failed deliveries, a pain point for most e-tailers globally, making the last-mile logistics less complicated.

"We are continually innovating to find solutions that enhance convenience and experience for our customers. We are running a pilot for in-store pick-up service in Bangalore. We have identified and trained staff at small kiosks and stores, run by individual entrepreneurs, to be our shipment pick-up points," Amazon India country head Amit Agarwal told TOI last week.
What is significant is how — unlike Indian organized retailers like Big Bazaar who have traditionally been pitted against mom-and-pop stores — this move from Amazon will help create a hybrid model where online players leverage corner shops to boost customer convenience.

"Depending on the results, we will take a call on how and what we want to roll out nationally at an appropriate time," Agarwal said. Amazon will pay a fee to these smaller brick-and-mortar retailers, but the world's largest online retailer did not give details of its financial arrangement with the offline stores.

The project is an indigenous improvisation on Amazon Lockers, which the company operates in the US and some other markets. Amazon Lockers act as self-delivery locations to pick up parcels from. "We want to be inventive in executing our global strategy locally. We have a team of passionate builders in India," said Agarwal, who has had a 15-year career with the Seattle-based Amazon, including a stint as executive assistant to the much storied Bezos.

The India head of the $75-billion internet giant, which started off by selling books two decades ago, said the domestic e-commerce market "is still in its early days" and possibly some of the present bigger names wouldn't exist in the future. Amazon is turning the heat on incumbent market leaders like Flipkart and Snapdeal with its trademark aggression focused on customer convenience, lower prices and a gargantuan collection. Both Flipkart and Snapdeal, which operate on the same marketplace model like Amazon, are well-funded by VCs and strategic players like eBay. The Indian e-commerce market, estimated at $2 billion at present, is expected to grow to $8.5 billion by 2016, according to projections by venture fund Accel Partners.

"The India operation is one of the fastest build-outs for Amazon globally—in terms of selection, sellers, traffic and even mass media advertising," Agarwal said. Amazon has been particularly sharp-focused on its one-day delivery in top 20 cities and recently introduced a 'scheduled delivery' programme for high-value products like televisions.

It entered India ten months ago with a marketplace model since Indian laws place restrictions on foreign investments in multi-brand retail. It had earlier tied up with India Post Services to leverage the government postal system's extensive reach. "We use IPS for over 19,000 pin codes through 1,40,000 post offices across all 35 states and Union Territories in India. The number of deliveries through India Post has increased from 800 last June to over 10,000 by March this year," Agarwal said.

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