Companies

‘Amazon expects 85% new customers from tier-2 cities’

Yatti Soni Bengaluru | Updated on September 25, 2021

Betting on rural demand Amazon is expecting 85% of new customers in festival season to come from Tier 2 & beyond cities, says Manish Tiwary, Vice-President 7

Focus will be on small stores and local shops this festival season: Manish Tiwary

As the festival season approaches, Amazon expects 85 per cent of new customers this season to come from Tier-2 cities and beyond.Amazon has announced its annual sale, ‘The Great Indian Festival’ (GIF) 2021 from October 4. BusinessLine spoke to Manish Tiwary, Vice-President, Amazon India, about the company’s plans for the upcoming festival season. Excerpts:

What are some new focus areas for Amazon in this festival season? Any new launches or offers that the company has planned?

There’s a renewed focus on the smaller sellers and new focus on the local shops. We had this small programme called local shops on Amazon that has scaled well since the pandemic. And now with this festival season, we have close to 75,000 such small stores across 450 cities, which will be selling on Amazon. So that’s a huge change for both sellers and our customers.

Further, learning from the last year, in the run-up to the Great Indian Festival, we have incorporated special offers from our sellers on all the SMB offerings, which is close to 60 million items on the Amazon.in. If you buy right now from these smaller sellers, you get some cashback which you can use during the Great Indian festival.

We have tried it last time and it was very successful, so we just enhanced it for this year.

Second, we had launched a store called Amazon Business for small and medium businesses. Today, it has over 15 crore GST-enabled products across categories. Now, to celebrate our fourth anniversary for a period of one week, starting from September 24, we are running special offers here.

How much growth in sales do you expect to see in this year’s festival season compared to 2020?

All of us at Amazon are focussed on what we can control and so we don’t talk about the output.

I’ll share some of the metrics that should give you a flavour of how optimistic we are about this festival season. Seller registration is going up; out of 8,50,000 sellers, about 300,000 sellers have come in the last 15-16 months.

Customer penetration is rising in smaller towns and you can sense that from the number of languages one can use to shop today.

That shows the growth of our user base.

Further, if you look at the infrastructure build-up, our warehousing capacity will be 40 per cent more than last year.

We are touching close to 43 million cubic feet and are hiring 1,10,000 seasonal workers to meet the demand this festival season.

Is the company strengthening its logistics network for the expected surge in demand?

On the logistic network, we now have close to 60 fulfilment centers across the 15 States.

And, wherever we see demand, we continue to open new fulfillment centers. For instance, we have opened two more fulfillment centres in Lucknow, because what happens is that a lot of sellers don’t have a national registry.

Anytime you want to sell from a State, you need to get a GST, which is very complex for a small seller.

Our intent is to take our warehouse close to them, so they can operate easily. In addition to growing warehouse capacity by 40 per cent, we are also ramping up our delivery stations.

We have close to 1,700 Amazon-owned and partner delivery stations. We have close to 28,000 ‘I Have Space’ partners, which are local stores near large complexes who can deliver orders during this time.

Pandemic has increased the number of e-commerce users in tier-2 cities and beyond. How did this reflect in Amazon’s user base?

I think the trend was always there, it just got accelerated in the past 12-18 months. Based on what we’ve seen in Prime Day and Small Business Day, we expect close to 85 per cent of new customers this Diwali to come from tier-2 and beyond.

A couple of years ago, this figure would have been closer to 60 per cent. So not only is the base growing, but the contribution from smaller towns is also growing.

Second, it’s not just new to Amazon; if you look at any 100 ship orders, close to 65 of them now come from smaller towns and that’s a significant shift.

Published on September 24, 2021

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