Amazon.com on Thursday flowed into India — not on its own but by using one of its offshoots. The world’s largest online retailer dusted off a website, Junglee.com, it bought 14 years ago and launched it in the country.
Amazon is obviously waiting for the government’s multi-brand retail FDI (foreign direct investment) policy before it comes in directly.
Junglee.com will not compete with established e-commerce sites like Flipkart or eBay and is being positioned as an online shopping service that will help customers discover products from other websites (including Amazon.com). When users select or choose to buy a product from Junglee.com, they would be redirected to the seller’s website.
Each seller will be responsible for shipping, will have their own refund and return policies and payment modules. Amit Agarwal, vice-president, Amazon.com, said, “The selection on Junglee includes more than nine million books and three million products from more than 14,000 Indian and global brands. Junglee would be that shopping platform where users can discover and compare products easily without going from one site to another.”
Not surprisingly, Flipkart and eBay are not part of the websites one can visit using the Junglee.com platform.
Amazon’s entry as a shopping catalogue aggregator is not being viewed as a threat by Indian counterparts. OLX.in, an online classifieds site which also merely connects buyers and sellers, claims it is not “just a meta shopping search tool like Amazon”. Amarjit Batra, country head of OLX.in, said, “We are a marketplace for local listings that include real estate to automobiles and Amazon is beginning with just shopping categories. We have not only more services and products for users than Amazon’s Junglee.com but also have an established network of buyers and sellers.” The site draws over 10 million users every month, claims Batra.
Experts say leading e-commerce sites like Flipkart need to watch Amazon’s entry carefully.
Benoy C S, director (ICT Practice), Frost & Sullivan, South Asia & Middle East, said, “While there is no immediate threat to existing e-commerce players, Amazon’s intention would be to establish itself as a full-fledged e-commerce portal eventually in India. That could be a cause for worry.”
Flipkart played a generous rival and welcomed the move. CEO Sachin Bansal said, "We believe FDI will go a long way in improving efficiency in the supply chain and also invite investment in relevant areas. It will bring down the overall costs in the system, leading to larger benefits for the Indian consumer. As far as the e-commerce sector is concerned, we are already witnessing significant investments in the supply chain and technology and we expect this to get a further boost, going forward."
India, with its 100 million internet users, is an attractive market for online retail. ComScore data indicate 54 per cent of the online population in India accesses retail services (websites) online. Data also show that around 10 per cent of the online population in India visits comparison shopping sites, the fourth largest retail category online. The top online retail categories, according to ComScore data, are computer software, consumer electronics and computer hardware.
Amazon, which set up its first warehouse in India last year, had said the move would make product shipments faster and cheaper. For now, Amazon products (like Kindle) ordered via Junglee.com will be shipped and charged the usual international product duties and taxes. Analysts maintained that with cost being a critical factor in online shopping, Amazon cannot compete with local players who can ship products at much cheaper rates.
For now, Junglee.com integrates with online and offline retailers, lists their entire selection of products available in India and uses Amazon’s search technology that enables customers to navigate and find what they are looking for quickly. Junglee also uses the same recommendation engine technology as Amazon.com, such as displaying the “Most Frequently Viewed Products” or “Customers Who Viewed This Product Also Viewed”.
Agarwal underlined that Junglee.com would look to tap local businesses and retailers, too. “Our goal with Amazon Seller Services is to help retailers of all sizes succeed and grow their business online. We will invest in helping local businesses build their brand and increase sales, while lowering the cost of selling their products online,” he said. Currently, Amazon is allowing Indian sellers to place their ads on its network for free.
Ram Shriram, founding board member of Google and one of the first investors in Google, headed Junglee that was acquired by Amazon.com in August 1998.