Amazon Business, the e-B2B wholesale arm of ecommerce major Amazon, is set to soon complete six years in September. During the period, it has expanded to 99.5 per cent serviceable pin codes to receive over 50 per cent of their orders from tier II and tier III cities in the country. Company Director Suchit Subhas sat down with DH’s Shakshi Jain to discuss the online shopping player’s performance so far, key trends in the segment and growth strategy going forward.
Walk us through Amazon Business’s growth trajectory since its inception.
We started off in 2017 with around 14,000 sellers and a limited selection. We were offering in a smaller number of cities, now we have expanded coverage to most of India. We’ve increased our delivery service level agreements which is again very important for business customers because their working capital sometimes gets blocked. If I deliver a product in one day then they don’t have to buy 10 days in advance, which helps with their working capital.
Currently we have 10 lakh-plus sellers and 19 crore products. We deliver to more than 99.5 per cent pin codes across India and have seen overwhelming response from tier 2 and 3 cities, with 63 per cent buying customers and 55 per cent orders coming from smaller cities. The business has grown close to 150 per cent over the last three years. We’ve seen 140-150 per cent increase in customers.
What is your growth strategy moving forward?
I think from a B2B standpoint ecommerce is still very nascent. I don’t think we need to do anything new or very different. We just have to keep providing customers this value and then others will hear about it and will want to try it out. Our learning over the last six years is that you provide them with a better selection, better value, that’s the only reason why they’ll come and buy from you.
What are some key trends that you have observed in the segment ?
Digitisation is picking up and it is not restricted to just the major cities. Customers value speed because it helps them in reducing their working capital. They value when we make it easy for them to keep track of their spending and taxes. Fast delivery is and continues to remain an important facet of all business customers which is reflected in the Prime customers contributing more than 50 per cent of the sales in the current year. Medium and large enterprises also prefer simplicity in their buying process and for their regular spends, they want to avoid the hassles of negotiation. This is reflected by 30 per cent customers preferring pre-configured bulk discounts on Amazon Business. We’ve found in India our customers who buy on app and mobile devices are much higher than in the US and anywhere else.
What are some challenges plaguing your target audience segment - the micro, small and medium enterprises - currently in India?
While our country has progressed in the technological array, MSME space still faces issues like unavailability of adequate and timely credit facilities, high cost of credit, access to wide selection of products across pin codes, inadequate work capital management, competitive pricing in comparison with large businesses, lack of modern technology, insufficient training and skill development and many more.
How do you see this space growing in India and what would be instrumental in achieving that?
MSMEs contribute nearly 30 per cent to the overall GDP and provide employment to millions. We see this space growing rapidly in future as well, with support from government schemes as well as tailwinds from affordable internet and digital solutions.
However, in current times this space faces many gaps such as the latest technology and skills gap, how to scale and expand, how to grow revenues and how to get new consumers. With the rapid adoption of digital solutions, the sector has huge potential to grow by embracing solutions such as ecommerce, e-procurement and many more.