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Amazon India expands offline delivery network: report

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Amazon India is expanding its last-mile offline delivery network to 12,500 offline stores and other retail outlets in 50 cities, reports Economic Times. Amazon’s offline delivery programme ‘I Have Space’ was launched in pilot-test mode in May last year in 2,500 offline stores; this will now be expanded into Tier-II and Tier-III cities, added the report. MediaNama reached out to Amazon for a comment and we are yet to hear from them.

The expansion will also cover another offline delivery service Amazon Kirana Now for grocery delivery, which was launched in March 2015. Amazon partners with local kirana (grocery) stores to offer this service and was in pilot stage in Bangalore during launch. Users can place orders on the website and pick up their orders straight from these stores. Apart from kirana stores, the expansion will include stationery stores, corner stores, modern trade outlets, telecom shops, beauty stores, among others, the report added.

With the expansion, these stores are expected to handle an average of 20-30 deliveries a day while all deliveries will be fulfilled by the store staff themselves. For the Kirana Now service, Amazon will deliver orders via its own logistics unit Amazon Transportation Service Private Limited, delivery boys from kirana stores and third party vendors.

Expansion of logistics

In July, Amazon India opened six new fulfillment centres (FCs) in Chennai, Mumbai, Delhi and Jaipur to expand its delivery presence in India and prepare for the festival season. The FCs allowed Amazon to offer its Fulfilled by Amazon service to small businesses in these states.

With this, Amazon’s logistics capacity included 27 fulfillment centres operational across 10 states in India with a total storage capacity of over 7.5 million cubic feet. Interestingly, Amazon India mentioned that 80% of the sellers used its fulfillment services.

Tie up with offline outlets

Amazon initially started working with kirana stores in Bangalore offering in-store pickup for products ordered from its website. The service was also an expansion of an earlier tie up with BPCL for in-store pick up service in 2014 . Amazon claimed to have identified and trained staff at kiosks, owned by individual entrepreneurs, which would also work as pick up points.

In 2012, Amazon received a government approval to set up its logistics service in India. It had launched its third-party logistics service in November 2013 starting with a pilot in the Delhi-NCR region. The company had then reportedly launched a pilot project in December 2013 to test India Post’s cash on delivery and started one-day deliveries the same month.

Amazon India’s investment and financials

In June, Amazon CEO Jeff Bezos announced that the company would invest $3 billion (about Rs 20,000 crore) into its India operations. This investment takes Amazon’s total commitment in India up to $5 billion, which includes the recent $3 billion and a $2 billion investment announced back in July 2014, which the company has already completed in phases over the past two years.

From the ROC data: Amazon Seller Services reported a revenue of Rs 1,022.1 crore for the year 2014-15, growth of 108.46% from the previous year. However, losses widened to Rs 1,723.7 crore during the period from the loss of Rs 321.3 crore in the previous year. Expenses also shot up during the year to Rs 2745.7 crore, compared to Rs 490.3 crore in the preceding year.


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