‘The great Indian festival sales were bigger than our entire shopping season 2014’

World’s leading e-tailer Amazon has seen sales grow in multiples this festival season as it added 40,000 products a day, facilitated sellers and buyers with innovative e-commerce platform and offered a new shopping experience to the world’s second largest consumer market. Not surprising, the number of sellers has grown more than 250 per cent year-on-year. In an interview to Bloomberg TV India, Amit Agarwal, MD of Amazon India, discusses about the e-commerce boom. Sellers have seen 8-10 times growth this Diwali compared to last year with the one crore club-sellers making more than ₹1 crore of sales this festival period — grow more than eight times and the  ₹10 crore club grew more than 11 times, he said.

What kind of demand are you seeing this festival season?

We had a great Indian festival sale recently to mark the beginning of the shopping season and then we have the great Indian Diwali sale that just ended last week. The demand has been very humbling and this has been probably the greatest sale event in our history. The reason I say that is because it has not only been very big in terms of demand from both consumers but we have also been able to provide great customer experience, despite the huge demand. The five days of great Indian festival sales were bigger than our entire shopping season 2014. And sellers have seen 8-10 times growth this Diwali compared to last year. We have also seen our one crore club-sellers making more than ₹1 crore of sales this festival period — grow more than eight times and our ₹10 crore club grew more than 11 times. More than 70 per cent of our demand has been from mobile, and our app has been ranked as number one shopping app on Android and IOS.

We also saw that more than 60 per cent of our orders came from remote cities. It was very exciting in terms of demand that we have seen. On the customer experience, we were even more excited. We were able to serve their demands without glitches, 60 per cent of our orders were delivered rather dispatched within the first six hours and one of the things that customers were able to enjoy in this sale was that more than a million items in Amazon were in stock ready to be dispatched immediately.

We saw more than 300 per cent growth in the premium orders. We also launched new feature where customers can opt for morning delivery and this was in Bangalore, Hyderabad, and Mumbai, where they could order as late as midnight and get it delivered early morning. We are happy that we were able to provide customer a great shopping experience.

Are you planning to increase your capacity or the number of vendors to meet the growing demand?

We have been working throughout the year to offer a great customer experience to add more sellers on our platform. We have had this initiative called the ‘Amazon Chai Cart’ that has been travelling across India for several months now and has served more than 30,000 cups of tea to sellers and brands out there. It goes to the seller’s dense areas and teaches them about how to sell online and how to engage with Amazon. And we have seen tremendous success in this as well.

In the four weeks leading up to the Diwali sale, we saw more than 25,000 sellers sign up. On the fulfilment capacity site we have launched 21 Fulfillment Centres in more than 10 States. We have the largest build out of physical capacity in India with more than 5 million cubic feet of space for sellers. We have also been giving seller facilities to act as Amazon Fulfillment Centres. We now have more than 13 of these lighted up and the other two going online soon. Both in terms of FC and seller signing up we have seen great momentum.

Would you look at increasing investment in India on the back of this?

This is very early time in the evolution of e-commerce in India. Our long term mission is to transform how India buys and sell. With this mission in mind, we have a very long term outlook in mind and we continue to invest very aggressively. We are working forward in term of our investment targets. Given the size of our opportunity and given our investment, we would not be surprised if India would be Amazon’s largest geography after the US in a next few years.

How large is India now compared with the rest of the EM pack?

India is very important for Amazon and we are seeing tremendous growth and momentum. Given our aggressive investment and opportunity ahead of us, I would not be surprised if India becomes Amazon’s largest geography after the US.

Any patterns you are observing in the South Indian products, which are being bought in the South versus the rest of India?

No, I won’t have the data accessible to be, but as I said customers are shopping from all parts of India and that includes the southern part of India. But I don’t have any specific data to share with you on the split of the South versus the direct.

Could you tell how this year has been compared to last year because the festival season has come in later and a low monsoon. So, rural demand rate has been softer this year, so on a year-on-year basis how will this compare?

Well we haven’t seen any softening at all. You have talked about how quarter ending in June. We were growing 500 per cent year-on-year. So, this Diwali itself so far has been 4 times bigger than our last Diwali. And even if I look August versus now as I said Diwali has been two times bigger than our august sales. So, we are not seeing any slowdown at all.

Most of the e-commerce firms have been offering massive discounts from September end this year. Are the companies offering the discounts alone or is it both the companies and e-commerce firms sacrificing their margins to push sales? Can you give us a sense on what was the pricing trend on an average from Amazon?

You know our job is: how do we empower sellers and reduce costs in their operations so that they can pass the savings to our customers at low prices. So, we have actually invested in building products such as Easy Ship and Fulfillment Centres. These products actually take up real cost out of seller profit and loss (P&L).

So, the cost of warehousing, delivery, return logistics and customer service not only reduce the cost for producers, it also removes defects from the products and increases conversion. So, what happens is sellers are selling more, they are having lesser defects and they have lower costs.

They are absolutely sure that every rupee they are saving on every item grows up and what they do is pass it on as lower prices to customers on our platforms. We constantly see sellers offering greater value to our customers and one of the metrics out there is how successful they are on our platform. As I said, the one-crore club has grown 8 times and the number of units that are using our Amazon logistics and warehousing services now are more than 90 per cent. So, overall we are seeing a strong adoption of costs for sellers and we are seeing sellers pass on those savings as low prices to our customers.

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