Amazon has set up a logistics company in India to deliver products directly to consumers, opening a new front in the battle for top honours in the country’s fast-growing online retail industry.
Amazon Transportation Services Private Limited, a subsidiary of US-based Amazon, will ship goods from sellers who transact on the company’s online marketplace in India. Such a service is already on offer from Flipkart through logistics company eKart, and Snapdeal, which bought a stake in delivery firm Gojavas last week.
“We want to change how India shops,” said Samuel Augustine Thomas, director of transportation for Amazon in India. “The logistics arm has been set up to aid in last-mile delivery as products can be shipped faster,” he said. Products sold on the Amazon marketplace are now shipped to some 19,000 pin codes across the country.
ATSL will be one of the logistics partners for Amazon’s Indian marketplace.
The company’s Indian marketplace expects to sell goods worth over Rs 12,000 crore ($2 billion) this fiscal. The company will continue to work with other partners including India Post and courier companies like Gati, Blue Dart and DHL.
Experts are of the view that “last-mile delivery” will increasingly be a crucial front in the war for leadership in India’s e-commerce industry, which is expected to be worth $43 billion (Rs 2.5 lakh crore) by 2018.
Startups specializing in providing third-party delivery logistics to e-tailers have emerged across the country, including Delhivery, which most recently raised funding of about $35 million. But in recent months, the top online marketplaces are strengthening their own in-house logistics fleets.
“All large marketplaces have opened their own last-mile logistics arms in India as the capability to deliver goods next day doesn’t exist in India’s logistics sector,” said Ankur Bisen, senior VP at retail consulting firm Technopak.
Also, companies with logistics capability can deliver goods for competitors, creating a potential new line of business. “It makes sense to hive off (logistics divisions) or operate as separate arms as they may achieve a scale and reach their full potential by servicing other ecommerce companies,” said Bisen.
Amazon currently operates nine fulfilment centres, ecommerce jargon for warehouses, in eight Indian states. It was the first online marketplace to offer two-day and one-day guaranteed delivery in India, a norm in the US market. This prompted Snapdeal and Flipkart to follow suit and launch same-day delivery as well, with Flipkart announcing plans to launch three-hour delivery this year. Bengaluru-based Flipkart is due to spin off logistics arm eKart — which so far has been a division of WS Retail — as a separate entity this year.
Easyship launched recently
Amazon India also recently launched EasyShip, an assisted shipping platform for 12,000 out of its 20,000 sellers, a platform which the company has now taken global.
“With EasyShip, our sellers can now choose their courier partners, and ship even on the same day,” said an Amazon India representative. With little to choose between the top online retailers and capital no longer a constraint, logistics is proving to be the differentiator.
“More than 60% of our customers are eligible for next-day shipping on products fulfilled by Amazon,” said a spokeswoman for Amazon.
While Flipkart guarantees next day delivery at an extra price of Rs 90 per shipment, Amazon charges Rs 99 per shipment. For same-day delivery, Flipkart and Amazon charge about Rs 140 and Rs 149 extra, respectively.
The regulatory filings made by ATSL show that apart from Thomas, Kuldeep Singh Bisht and Rakesh Mohan Bakshi are also directors at the Delhi-based company, which has a paid-up capital of aboutRs 24.8 crore. Thomas was earlier the managing director for western and southern operations of Federal Express, the US-based courier company.
Bakshi, Amazon India’s legal head is a director on Amazon Wholesale (India) Private Limited and Amazon Internet Services Private Limited.Bisht is also a director with Amazon Internet Services Private Limited.
