Amazon India is working on its new offering Prime. According to a recently released survey by Morgan Stanley globally 40% of Prime members spend more than $1,000 per year on Amazon as against 8% by non-Prime members. Prime members on an average also spend 4.6 times more than non-Prime members. Amit Agarwal, senior VP and country manager, Amazon India, tells FE’s Anushree Bhattacharyya how Amazon Prime as a service has gained traction in India. Excerpts:
According to a latest Morgan Stanley research, Amazon global has 65 million Prime subscribers and is generating $5.75 billion a year in revenue from Prime subscription. Where does India stand when it comes to customers opting for Prime?
The shopping behaviour of Indian customers remain the same when they make a move from a free subscriber to a paid one. We see that not only consumers tend to shop more once they turn into a paid subscribers, they shop across more categories. We believe Prime in India will have a similar effect that it had everywhere. Currently, more than 30% of our units are ordered by Prime members. Fashion and cosummable are two fast growing categories. Also in Q1 CY 2017, we posted a 85% growth compared to the same period last year.
How do you plan to use Amazon Pay to drive purchase on the e-commerce platform?
We launched Amazon Pay last year and we have seen that customers who use the service have more friction free experience, mostly at one click. Through Amazon Pay, we would play a significant role in moving people to cashless transaction. We have seen a meaningful reduction in the share of cash-on-delivery (CoD) transactions post demonetisation and it has stayed there.
How is the e-grocery business doing for Amazon India?
The e-grocery business is doing well with most of the order placed through mobile. Right from day one we have said that we want to be that destination where customer come and buy anything and everything online. We have three services starting with Amazon Pantry. Currently available in 52 cities Pantry allows customers to stock-up weekly and monthly grocery supplies at best prices. Next is Amazon Now which is available in four cities, which allows customers to top-up items they may not have. The product is delivered within two hours of placing the orders. Lastly, under gourmet grocery section, we sell those special products which consumers do not really get anywhere.
A lot of has been said about Amazon focusing on bettering its unit economics post the increase in referral rates, especially when Flipkart claims to have reduced it. How important is unit-economics for the business to sustain?
We don’t really drive our strategy based on what’s happening around. Our approach is to give maximum return on investments to our sellers. So we are very focused on how we build products and services for them that allows them to reduce their cost structure and increase sales. We change our fee structure infrequently and we do that very thoughtfully with sellers.