Why the arrival of Amazon Prime is a key milestone in winning India

Jeff Bezos must be pleased as a punch. Photo credit: Steve Jurvetson.

Amazon today launched its prime membership program in India – six days after Tech in Asia reported it was coming. This is a well-calibrated move following a series of steps to solve the delivery conundrum in a large, disorganized market.

First, the salient points of Amazon Prime in India. There’s a 60-day trial period, which is twice the one-month trial in other countries. And the introductory annual subscription fee of INR 499 (US$7.4) is half the listed price of INR 999 (US$14.8).

Membership benefits include fast and free delivery in 100 cities, and early access to deals. Amazon has also announced that Prime Video, giving members access to movies and TV shows, will be coming soon to India.

But it’s delivery that holds the key to winning the ecommerce battle against local rivals Flipkart and Snapdeal.

“With Prime, guaranteed one-day delivery becomes an everyday experience instead of an occasional indulgence, and with no minimum purchases, it provides unlimited convenience,” says Amit Agarwal, Vice-President & Country Head, Amazon India. “For sellers, Fulfillment by Amazon is now an even more powerful opportunity to rapidly grow their business.”

Amazon’s winning formula for India

Jeff Bezos (R) and Amazon India’s Amit Agarwal ride a truck. Photo credit: Amazon.

Before the launch of its prime program, Amazon took a series of calculated steps to tackle the delivery challenges that could be the undoing of many an ecommerce venture in India.

It invested heavily in warehouses – which it calls “fulfillment centers” – all across India, recognizing the difficulties of a centralized system which it uses in other countries. A large chunk of the billions of dollars it pumped into its India arm went into this fulfillment network.

The localization of warehouses has not only helped in reducing the cost and time for deliveries, it has also encouraged sellers to use the ‘Fulfillment by Amazon” option. There’s even a facility for picking up goods from the vendor. For India’s multitude of small vendors, this removes a big painpoint.

Amazon Prime thus comes into India after the infrastructure for ensuring it goes smoothly has already been established.

Cracking the marketplace model

The narrow streets of Indian bazaars. Photo credit: HappyTrips.com.