Not to sell its own products in line with FDI rules

Amazon, the world’s largest online retail company, has entered the Indian e-commerce space, promising low price for users and a better sales platform for sellers. India is the tenth market where Amazon has launched a country-specific retail Web site.

But unlike Amazon sites in other countries, the Indian venture is limited to third-party sellers. Amazon will not be selling its own inventory due to foreign direct investment (FDI) regulations prohibiting foreign retailers from selling their own products online.

To start with, consumers will be able to buy books, movies and TV shows. Amazon.in will introduce additional categories including mobile phones and cameras in the coming weeks. On day one, the book store featured over 7 million print books across 200 plus categories while the video store featured a collection of over 12,000 titles in English and Hindi.

While Amazon has not previously had a branded presence in India, in February 2012, it made its foray into the Indian market with the launch of Junglee.com, which connects buyers with online and offline retailers but with no sales transactions.

Real challenges

The launch of Amazon.in comes at a time when other e-commerce sites in the country have not been doing well. There are challenges including customer suspicion towards the quality of products sold online and lack of trust on payment mechanism.

Amit Agarwal, Vice President, International Expansion, Amazon.com, told Business Line that while these challenges are real, other markets have shown similar trends at the nascent stage. “When you make your investment decision with a timeframe of 10 years then these things do not matter,” he said. From the consumer point of view, Amazon offers a platform which is aimed at offering a low price on any product by allowing sellers to compete.

For the seller, Amazon is offering unlimited shelf space with no listing fees. “From packaging to taxation to delivery logistics we are offering all of it in a simple package to sellers.,” said Agarwal. Sellers on Amazon pay for storage space per cubic feet and a one per cent referral fee.

Pan-INDIA REACH

“Selling on Amazon presents an exciting opportunity as it opens up a new sales channel with pan-India reach at virtually no investment,” said M.S. Jaya Prakash, Proprietor, EducationSupplies. “Prior to this, I did not sell online and was apprehensive about how to fulfil online orders in a timely manner, handle customer service and manage returns.”

thomas.thomas@thehindu.co.in

(This article was published on June 5, 2013)
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