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Amazon Plans Marketplace For India

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Update: The Economic Times reports that Amazon will hire around 3300 people in Hyderabad, and invest around Rs 500 crore (around $100 million at current rates) over three years.

Earlier (November 9th): Amazon is planning to launch a marketplace in India, MediaNama has learned from multiple industry sources. Prabhakar PJ, responsible for Business Development at Amazon.com, on being contacted declined to confirm or deny the development.

According to our sources, the company is tying up with multiple e-commerce ventures to feature their products on the Amazon India website, an e-commerce venture tying up with Amazon told us on condition of anonymity. Retailers have to provide XML based feeds of their products to Amazon, customized to Amazon’s categorization, and on completion of the sale, they will be responsible for delivery. Each retailer will be reviewed and rated by customers.

What’s interesting here is that Amazon is going to manage the payments, according to our sources, take a commission that could be around 2% to 7%, but could be higher for apparels. Amazon will manage the front end, and it is likely that there will be no cash on delivery option. Another source suggests, however, that Amazon is in talks to acquire a logistics company.

So why will some Indian e-commerce ventures tie up with Amazon instead of competing with it? One source says that Amazon’s traffic from India is much higher than that for Indian e-commerce ventures. For a commission, they get sales.

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  • Interesting development! Could be a sweet deal for the e-commerce ventures given Amazon’s reputation and traffic as mentioned. I think a commission of 2-7% may not be too much of a hindrance. Considering the case of Flipkart (unlikely they will partner though) which already runs a affiliate model offering as much as 6% commission on books, Amazon could just be that big time affiliate that brings in large volume sales. The only challenge being the lack of Amazon not opting for the ‘end-to-end’ approach. If the delivery responsibility rests with participating vendors, every possibility any screw ups on their part will end up hurting Amazon’s reputation

    • Well, that’s how Amazon rolls in the US too. A lot of stuff on Amazon.com not sold by Amazon or shipped from Amazon warehouses, but is done by affiliates. In my experience, I didn’t face any problems with the participating affiliates. In India they might go for stricter SLAs for the delivery with the affiliates. 

      • Exactly! Barring a select few, the whole delivery, post-sales experience has not been really upto the mark. As long as Amazon keeps a tight leash, it might work

  • The only reason I see Indian e-commerce ventures tying up with Amazon is to cash on the Amazon brand name and goodwill with customers. People are more likely to buy an item from Amazon, even if it’s sold and shipped by one of its affiliates. They may not go to that affiliates own website to buy the same item. The reason is customers trust Amazon more with payment processing, safety of their credit card information, privacy and delivery promise as compared of a nondescript affiliate.

  • Ain’t Amazon following this model because of the FDI cap on retail business ?

  • … the best part (60%+) of success of ventures like Flipkart  & HS18 is due to cash on delivery option. Amazon must consider this.

  • Raja De

    Simple & better.. Amazon should not enter the India Market…