Amazon.in, the Indian arm of the world’s largest retailer, has doubled its delivery capacity ahead of the Diwali sale, a crucial period where e-tailers usually achieve 10-15 per cent of their annual sales in a mere five days, as it looks to trump Flipkart this time.
With this move, the company has expanded next-day delivery capabilities to over 650 cities, and overall reach for large appliances to 14,000 pin codes.
Amazon has made significant investment in supply chain this year, which will enable faster delivery, cover more pin codes and delivery superior buying experience, Akhil Saxena, vice president, India Customer Fulfilment, Amazon India said in an interview.
Last year, with five-day sales of about $900 million, Amazon trailed Flipkart, which sold goods worth $1.4 billion, according to estimates from RedSeer Consulting.
Without sharing figures for projected incremental sales, Saxena said, “we have literally expanded our delivery capacity two fold and that should be some indication of what we expect to see (during the sale).”
Both Amazon and Flipkart haven’t announced dates for Diwali sale, which is likely in October, so far
To prepare for the sprout in sales, Amazon has expanded its network of ‘delivery stations’ to now 250, including new large-format ones recently opened in Chennai, Hyderabad and Pune. A delivery station, which typically covers 3,000-10,000 sq ft area, is meant to store, sort and push out parcels at places where the customers are located.
Of the 250 delivery stations, 100 are re-modelled to exclusively dispatch large appliances and furniture. Large appliances make up one of the top-3 e-commerce categories. The expansion will significantly help Amazon service non-metro markets in states such as Andhra Pradesh, Assam, Bihar, Uttar Pradesh, Maharashtra, Gujarat, Jharkhand and West Bengal, the company said.
Investments have also been made into increasing the capacity and efficiency of large fulfilment centres that cater to major metro markets, where the bulk of sales happen. At present Amazon runs over 50 such centres, with total capacity of 24 million cubic feet and 5.4 million sq ft area, according to Saxena.
He, however, declined to comment whether the company has started using Future Group outlets like Big Bazaar for stocking and supplying good for Amazon.
Two months ago, Amazon bought an indirect minority stake in Future Retail, which operates Big Bazaar and a slew of other stores, for an estimated Rs 2,000 crore. The deal followed the acquisition of More supermarket, which is currently a major seller on the Amazon Prime Now grocery app.
For last-mile delivery, a large part of expansion is done through partners under a bunch of programmes.
Under the Delivery Service Partner programme, where lone entrepreneurs manage local distribution on behalf of Amazon, 250 partners have taken delivery coverage to 1,400 nodes, compared to 700 nodes last year. A bulk of this network exists in tier-4 and 5 locations such as Anand, Cuddapah, Azamgarh, Kodagu, Hamirpur, Koraput and Solan, and helps Amazon service these markets.
Amazon also manages ‘I have space’ program where local kirana stores act as storage centres for Amazon and sometimes undertake deliveries. The program now has 23,000 retail store partners in over 350 cities.
The company also announced the expansion of Amazon Flex, a program that allows anyone to offer his service as a delivery agent. Having launched in three cities in June, it is now expanded to seven.
“In preparation for the festive season this year, we have significantly scaled our delivery programs and focused our efforts on - widening the reach of our direct delivery network, enabling speed in the delivery promise for our customers and improving their delivery experience,” said Saxena.