Amazon is building logistics network in rural India to score lead over competition

Six years ago when Amazon entered the Indian e-commerce market, everybody expected US e-tailer to shake up the market in the country. And it did to a large extent by raising its play against rival and home-grown e-commerce posterboy Flipkart, mostly in urban part.

But when it comes to Amazon's penetration in the rural area, there is a lot left to be desired and accomplished.

Only 40 per cent of online shoppers, mostly in urban areas, in the country, transact online. Rural areas, which touted to bring next wave on online consumers, still remain untapped and unexplored. Consumers experience is also a major barrier to accessing the internet.

This where Amazon has its eyes set on.

The Jeff Bezos-led firm is making more efforts to present itself as an easily accessible destination to online shoppers in rural regions. The e-tailer is building logistics networks from scratch.

The firm has been opening and partnering to open small stores for consumers, which will help them shop online and erase their fear associated with online shopping. It has partnered with about more than 20,000 small stores, outlines The Wall Street Journal report.

The stores also serve as pickup points for them. The plan seems to have been at the initial stage and reported to have evoked a good response from the new consumers. The move is primarily to draw in consumers, who earlier could not place an order due to location issue.

Amazon has also been reportedly working on offering products in multiple languages.

Earlier in September, the e-tailer had added Hindi as a preferred language, helping consumers who do not understand the language. Amazon has also been adding videos for hundreds of its products to explain it to consumers.

Amazon is well aware that the next wave of innovation in India needs to focus on serving the unique needs of 500 million population base, which is either using the internet or making a transaction on the internet for the first time.

Till date, Bezos has committed a $5-billion investment, most of which has already been invested, for India. It has reportedly raised its investment to $7 billion in the country after Walmart 77 per cent stake acquisition of Flipkart.

In the last fiscal it suffered losses of about $1 billion. But it does not deter the e-commerce major, as per Amazon India head Amit Agarwal, who believes that the e-tailer will put more in next round of investment if this is what it takes to win the Indian market.

Currently, Amazon has 10 million prime subscribers in India. The e-tailer aims to have 100 million users on its platform by 2022.

At present, India’s e-commerce market is worth $36 billion. The market is expected to cross $100 billion by 2022, as per Nasscom and PwC report.