FMCG or consumables has emerged as the star performer for e-commerce major Amazon India, if Saurabh Srivastava, Director, Consumables FMCG, Amazon India, is to be believed. The segment covers 19 lakh products across 9,000 sellers and spans segments, including groceries, staples, household essentials, baby products and so on. Globally, FMCG is one of the most strategic categories for Amazon. In an interview to BusinessLine, Srivastava talks about how the sector has performed for Amazon India and the e-com major’s way forward. Excerpts:

How important is FMCG or consumables for Amazon India?

We started thinking about this category even before we launched Amazon India. It is not an after-thought, but a part of our strategy. Customers interact in this category on a day-to-day basis. And if Amazon can offer good value – price, delivery, convenience, vast selection and so on – then by virtue of serving this category Amazon would become more relevant to customers. We are investing significantly in this segment, globally and in India.

Can you share the growth numbers in this category?

Last year (2016), we grew 165 per cent y-o-y. And, in 2017, we are continuing that trajectory. So, FMCG is one of the top three product categories for us. And in terms of number of units sold, FMCG / consumables is the highest.

Do you customise offerings as per Indian requirements?

Yes. Take the case of our pantry services (Amazon Pantry). It is a global offering. And normally shipping promise is within three-four days. But, in India, we have localised it in the sense that we offer shipping next day.

When we launched in Kolkata, we got 250 brands and 3,500 products. But, we spent time curating selections that are relevant for the city. Some will be common, but we put in local preferences. So we are customising by the city.

What sort of demand do you get from tier-II & III towns?

Slightly over 50 per cent is from tier II and III cities.

Ordering online and that too for daily items has to come in as a habit. Is discounting the way forward to instil such a habit?

Why just India, even globally customers do not have the habit. They are used to going to a store. But at Amazon our belief is, you cannot change customers’ shopping habits based on price (discounting). Price is just part of the equation in case of consumables unlike cell-phones which is price-driven.

Rather here (in FMCG) convenience supercedes price. People want certainty of delivery, quality issues like usability of the product with sufficient expiry date, keeping them in hygienic conditions and so on. So these are not easy problems to solve if you are doing at a scale.

For example in Amazon Now, we train our people to choose the best vegetables for the customer. If he doesn’t get the required quality, we may deny serving the customers.

So does this segment ensure loyalty or repeat customers?

FMCG ensures loyalty more than any other category. We have seen it. People who shop twice during our ‘Supervalue Day’, they buy across categories in the future. We see this phenomenon and more pronounced in India.

Does this segment break-even for Amazon?

We are in investment mode and this will continue for some time.

Would Amazon look to introduce private labels in the consumables space?

Private labels are generally introduced to satisfy a particular quality and value expectations. Customers do not seek private labels. Is introducing a private label something we should look at, like we did in case of apparels, may be we would. But right now, the focus is on geographical expansion (of consumables segment) and expand existing brand offerings. There are regional products that are not available pan-India. So can we introduce such (regional) offerings nationally and so on.

The online grocery segment is seeing multiple players now. Are you worried?

There won’t be dearth of growth opportunities in this segment for the next 10 years. None of us should be worried.

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