A year since e-tailer Amazon launched its Prime service in India, the programme has grown six-fold, racking up close to eight million in terms of registered members, according to industry estimates. That works out to about 11 per cent of the total user base of Prime globally, not a bad feat given that most wrote off the initiative during launch in July 2016.
But Amit Agarwal, senior vice-president and country head, Amazon India, was resolute in his belief that it would click and that the discerning consumer would pay more for faster delivery, exclusive content and discounts. Prime today accounts for nearly 30 per cent of all orders on Amazon India.
While the yearly subscription service was originally priced at Rs 999, Amazon quickly realised that keeping it affordable would help in penetration. It continues to be available at a 50 per cent discount, making it an enticing proposition for consumers. Amazon Prime, according to sources, has made significant in-roads in metros. Tier II, III and IV markets are next on its horizon.
“As we continue to expand our reach, it is clear customers will come from markets beyond tier I cities. Prime provides members the option of single-day delivery in over 100 cities in India. We added Prime members from 350 cities during this festive season, from Jammu in the north to Port Blair in the south, Sikkim in the east to Jamnagar in the west,” an Amazon spokesperson said.
The spokesperson adds that Prime’s success in India has prompted the American major to introduce products such as Alexa (Amazon’s cloud-based voice service) in the country. “The reception to Prime has been so good that we launched Alexa in a year of bringing the loyalty programme to India. The US launch took nine years,” the spokesperson says.
Analysts say that consumers especially in urban e-commerce markets are maturing in India, demanding more from e-tailers. Prime, says Amarjeet Singh, partner, tax, KPMG India, taps into this felt need. “People want premium services. And are not averse to paying for it,” he says.
Rivals such as Flipkart are taking heed of this and are now believed to be looking at bringing back services such as Flipkart First, a loyalty programme launched earlier. The new version of Flipkart First may see the e-commerce giant offering a range of products and services, giving subscribers the option of faster delivery apart from exclusive discounts.
Prime Video
Analysts say the crown jewel in the Prime service for Amazon in India remains its entertainment content, which brings in the subscribers for the e-tailer. According to Amazon, its Prime Video app is already among the top entertainment apps across iOS and Android phones.
“Amazon Prime Video has the largest selection of latest and exclusive movies, television shows, stand-up comedy and originals, which have shattered viewership records,” the spokesperson says.
According to brand experts, the company has managed to get the idea across that it is serious about the service it is providing through Prime. “At the moment, the programme is mainly a service led by metro and tier-I users. It needs to go beyond, into smaller towns and cities, for the service to improve its base,” Samit Sinha, managing director, Alchemist Brand Consulting, says.
In earlier conversations with Business Standard, Agarwal said, “We do not hold ourselves back from making investments in order to grow the business. Our strategy has always been to be laser-focused on the customer. In all this noise, the stakeholder who is most dissatisfied is the consumer. We are always thinking of building a better service.”
This seriousness, say experts, is needed in a competitive market like India, where Amazon and Flipkart are fighting a stiff battle.
India’s e-commerce sales stood at around $14 billion to $14.5 billion in 2016 and is 12 per cent of the entire retail market in the country. In the last one year, Amazon and Flipkart have tried to elbow each other out as they stake claim to the top spot.
While Flipkart after the recent rounds of festive season sales has claimed that it is ahead of Amazon in gross merchandise value, industry experts say the two companies are neck and neck. The Sachin Bansal and Binny Bansal-led company is number one in some verticals, while Amazon leads in some others.
In the next few months, Amazon plans to add more products to its Prime list. It already sells 11 million products here. Also, with introduction of Alexa devices, it hopes to bring in more Internet-of-Things-(IoT)-related products for the Indian consumer.
But Amit Agarwal, senior vice-president and country head, Amazon India, was resolute in his belief that it would click and that the discerning consumer would pay more for faster delivery, exclusive content and discounts. Prime today accounts for nearly 30 per cent of all orders on Amazon India.
While the yearly subscription service was originally priced at Rs 999, Amazon quickly realised that keeping it affordable would help in penetration. It continues to be available at a 50 per cent discount, making it an enticing proposition for consumers. Amazon Prime, according to sources, has made significant in-roads in metros. Tier II, III and IV markets are next on its horizon.
“As we continue to expand our reach, it is clear customers will come from markets beyond tier I cities. Prime provides members the option of single-day delivery in over 100 cities in India. We added Prime members from 350 cities during this festive season, from Jammu in the north to Port Blair in the south, Sikkim in the east to Jamnagar in the west,” an Amazon spokesperson said.
The spokesperson adds that Prime’s success in India has prompted the American major to introduce products such as Alexa (Amazon’s cloud-based voice service) in the country. “The reception to Prime has been so good that we launched Alexa in a year of bringing the loyalty programme to India. The US launch took nine years,” the spokesperson says.
Analysts say that consumers especially in urban e-commerce markets are maturing in India, demanding more from e-tailers. Prime, says Amarjeet Singh, partner, tax, KPMG India, taps into this felt need. “People want premium services. And are not averse to paying for it,” he says.
Rivals such as Flipkart are taking heed of this and are now believed to be looking at bringing back services such as Flipkart First, a loyalty programme launched earlier. The new version of Flipkart First may see the e-commerce giant offering a range of products and services, giving subscribers the option of faster delivery apart from exclusive discounts.
Prime Video
Analysts say the crown jewel in the Prime service for Amazon in India remains its entertainment content, which brings in the subscribers for the e-tailer. According to Amazon, its Prime Video app is already among the top entertainment apps across iOS and Android phones.
“Amazon Prime Video has the largest selection of latest and exclusive movies, television shows, stand-up comedy and originals, which have shattered viewership records,” the spokesperson says.
According to brand experts, the company has managed to get the idea across that it is serious about the service it is providing through Prime. “At the moment, the programme is mainly a service led by metro and tier-I users. It needs to go beyond, into smaller towns and cities, for the service to improve its base,” Samit Sinha, managing director, Alchemist Brand Consulting, says.
In earlier conversations with Business Standard, Agarwal said, “We do not hold ourselves back from making investments in order to grow the business. Our strategy has always been to be laser-focused on the customer. In all this noise, the stakeholder who is most dissatisfied is the consumer. We are always thinking of building a better service.”
This seriousness, say experts, is needed in a competitive market like India, where Amazon and Flipkart are fighting a stiff battle.
India’s e-commerce sales stood at around $14 billion to $14.5 billion in 2016 and is 12 per cent of the entire retail market in the country. In the last one year, Amazon and Flipkart have tried to elbow each other out as they stake claim to the top spot.
While Flipkart after the recent rounds of festive season sales has claimed that it is ahead of Amazon in gross merchandise value, industry experts say the two companies are neck and neck. The Sachin Bansal and Binny Bansal-led company is number one in some verticals, while Amazon leads in some others.
In the next few months, Amazon plans to add more products to its Prime list. It already sells 11 million products here. Also, with introduction of Alexa devices, it hopes to bring in more Internet-of-Things-(IoT)-related products for the Indian consumer.
Fast Facts
- India investment by Amazon: $5 billion*
- Prime members in India: 8 million**
- Number of Prime products sold: 11 million***
- Prime membership cost: Rs 999/yr, discounted at Rs 499
*Amount set aside;
**Estimated number; ***In India; Source: Industry
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