Suddenly, the battle to capture a larger slice of the Indian e-commerce consumers’ wallet has picked up steam. On a day when Flipkart unit Myntra acquired fashion retailer Jabong in a $70-million deal, global leader Amazon upped the ante by launching Amazon Prime that offers free one/two-day shipping across 100 Indian cities without any price cap for merchandise marked Prime on its website and app for a trial annual subscription of R499, which will be later hiked to R999. This is on the lines of Flipkart First that offered free delivery for an annual fee of R500. But, that’s where the similarity ends. Indian subscribers of Prime will soon get access to Prime Video, its digital video service that is quite on the lines of Netflix. To build on the digital content, Amazon is reportedly investing $300 million in funding movies and television series in India.
While Amazon does not reveal the Prime subscriber base, according to a Consumer Intelligence Research Partners report, there are 54 million Amazon Prime subscribers in the US paying $99 a year. More importantly, these subscribers notch up annual purchases of $1,200 compared to $600 for non-Prime users. The success of Amazon Prime in India is important for CEO Jeff Bezos since he believes that India will be Amazon’s biggest market after the US in a decade. It is to capture this opportunity that Bezos has committed to invest an additional $3 billion in India, raising the total investment in the country to $5 billion. Prime could be critical for Amazon to break into the Indian market. That is important for Bezos since Alibaba and JD have outmanoeuvred Amazon in China, the other huge market. But one problem that Amazon will have to contend with is that Indians have all along been wary of being tied-in to annual subscription services. Even in mobile telephony, over 95% of the subscribers are on prepaid plans. Getting millions of consumers to opt for subscription is critical for Amazon’s success in India.