Supply chain yet to return to normalcy: Amazon India

Every year, Amazon.in’s annual festive season sale gets ‘bigger and better’ than the previous year. This year being an unprecedented one with the outbreak of Covid-19, the focus is not on big discounts but on the safety of employees and delivery people, reliability for customers and helping sellers get back on their feet, Manish Tiwary, Vice-President, Amazon India, told BusinessLine in an interview. Excerpts:

I think this Diwali is very different for us. Taking a step back, we had a phase of March 23 to May 18 which was largely focussed around food and hygiene products because they were classified as essential items by the government. We were busy ramping up our food services — Amazon Fresh and Amazon Pantry. During this phase, we also had a whole lot of sellers whose goods were in our warehouses and were not moving out because they were non-essentials.

Second, as far as customers are concerned, we focussed on groceries and food services first and doubled down on reliability in these uncertain times by promising customers delivery a day late, but making sure it reached them on that day. Third, we rolled out a series of fee waivers for our sellers.

As we lead up to Diwali, the focus is not so much on how to work with sellers/vendors to come up with big discounts or deals but how we help both sellers and vendors by getting more of them onto Amazon.in. Compared to February, which is pre-Covid, we have seen a 50-60 per cent increase in seller registrations. Everyday, we see that number increase as more and more sellers want to sell online. Earlier, sellers/vendors would ask us for data on what customers are buying, and would source that. But now, in a lot of categories, they don't have that wherewithal. So that's a very big difference.

Our sellers are very optimistic and are eagerly looking forward to the Diwali sale because offline is not operating. What new products will go into Diwali? It's not so much what I decide. It's about how much inventory sellers have and what pricing they want for it. These days forecasting beyond a week is challenging. As a marketplace, we are getting ready for Diwali to ensure good, reliable, fast, delivery. I want to maximise the number of sellers who have the highest ever sale during Diwali this year.

I think in unit terms, it would still be a toss-up between consumables and fashion. The demand for consumables including groceries, fresh fruits and vegetables is very high right now with the way Amazon Pantry and Amazon Fresh have scaled up. In value terms, you are right, it would be mobile phones and consumer electronics, which includes appliances.

Supply is a big challenge — any category you can think of including headphones, laptops, mobile phones, ergonomic chairs or furniture, the supply chain has still not come back to what it used to be, be it local or be it imported. And therefore, this time is not about what discounts or deals we are giving out.

Six months back, if you had one laptop at home, it was okay. Today you need four or more depending on the number of people at home and I don't think anything will change dramatically till the vaccine comes. Now, there is a supply constraint on laptops — all the big vendors, be it HP, Lenovo or Dell, are facing it. Spending so much time at home, everyone wants to upgrade to a larger TV but there is a supply constraint on TVs. We are living in a very different situation right now.

We're not adding too many new categories because right now we are focussed on meeting the existing spike in demand for dog and cat toys, for instance, as the number of people who are adopting pets right now is massive. In the 'stay at home' space, we are seeing a very great spike in demand for essential clothes, be it undergarments, tees or shorts.

If you wanted to buy Jockey stuff from Amazon.in, my biggest worry is we’re out of stock, mostly because sellers are struggling to stock. If you look at footwear, athletic shoes and open slippers (Hawaii chappals), we are struggling to meet the demand. We have seen a heavy spike in demand for new furniture and gourmet food as people spend more time at home.

Sports has seen a very big uptake — the number of treadmills we sold over the last one month could open up three gyms in every district in the country. Amazonbusiness.in, which serves small MSME business customers, has become very active during this period. Earlier, these customers would go to the wholesale market to buy paper, tea, laptops etc for their office. Now they are moving to Amazon Business because a lot of wholesale markets are not open.

We can’t help them with the supply chain, but we can make sure the goods they get the right visibility and ‘publicity’. What typically happens with electronics is there are two launch cycles in the year. One is March/April, and one is Diwali. A lot of companies have missed a launch season. You were supposed to launch, so you stopped raw material and production for components for the last laptop, you could never launch the new laptop because China went into shutdown.

The planning has got completely thrown off track. Think of it like version 4, version 5, version 6. In March you would have launched version 4, and in September version 5. You missed version 4 and can’t jump to version 5 because there’s a plan in place. Even for fashion sellers, all the spring collection remains unsold as movement was restricted during the lockdown.

So, manufacturers and sellers are now trying to innovate and sell those same products again pre-Diwali because everyone is keeping their fingers crossed that consumption will happen. And that’s what we are helping with, because the seller is saying — I have to sell this. And that's the big difference which has happened.

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