As part of its strategy to dominate the Indian e-commerce space, the US online retailer Amazon is diversifying its logistics business by offering the service to its registered sellers even if orders are placed through rival marketplaces like Flipkart and Snapdeal or for their offline distribution, according to an ET report. Besides that Amazon is also contemplating on foraying into food delivery services, taking on the might of Swiggy. What is more, Amazon is in fact, eyeing Swiggy for a possible acquisition, quoting industry grapevines the report pointed out and added that the e-commerce behemoth is in negotiation with few food tech start-ups for this.
The foray into the food delivery space is part of Amazon's strategy to control a larger pie of the Indian e-commerce market. In fact, the company has already commenced a pilot for the logistic services with 300 sellers for this who are registered in its marketplace, quoting three industry executives privy to the plan, the report said.
Amazon Transportation Services undertakes its mother company's logistics service. This apparently is part of Amazon's strategy to control a larger pie of the Indian e-commerce market, noted the report. As per the report, the ATS was earlier mostly servicing the Fulfilled by Amazon (FBA) orders, where the seller stored the products in Amazon warehouses from where it would be packed and shipped to the customer doorstep.
“Amazon wants to build ATS into an independent logistic service which competes against Flipkart’s Ekart and other independent logistic services like Blue DartBSE -0.51 % and FedEx. It has started with its own sellers, but eventually will even look at offering logistic services to brands and other businesses. ATS has recently hired a lot of executives from leading courier companies,” one of the industry executives told ET.
Another executive said Amazon has priced ATS competitively to sellers which are lower than third-party courier services. "Amazon wants to control each and every segment of the e-commerce value chain since they also sell packaging materials for online shipments", he said. When contacted by the daily, an Amazon India spokesperson refused to comment on future plans.
A leading home furnishing and craft seller which also sells through Amazon, Exclusive Lane co-founder Dhruv Goyal told ET that given the very large and extensive seller's portfolio, Amazon would want to cash on the opportunity of offering its logistic services to the registered sellers for fulfilling shipments on other marketplaces as well. “They would also be extending these services to sellers to send their FBA and Cloudtail shipments which are currently fulfilled by logistic companies such as BlueDart, DTDC, and FedEx. These companies are going to have a hard time competing with Amazon,” Goyal was quoted as saying.
Stating that the e-commerce drives significant investment and value for the Indian logistics sector and has emerged as a key growth driver for the logistics industry, the report went on to add that the logistic sector specific to online retailing in India was valued at $0.46 billion in 2016. What is more, it is estimated to log a CAGR of 48% in the next five years to reach $2.2 billion by 2020, citing a study conducted by KPMG and CII, the report pointed out.
Competitor Flipkart’s logistics division Ekart is looking to tap offline networks for its courier business and compete with the likes of DTDC, Blue Dart, among others, said the report. Currently, 90% of Ekart’s resources are used for Flipkart group companies while rest is being utilized for external clients and businesses, the report added.
Amazon has always been a shopping paradise not only for its regular customers but for third-party sellers as well. How to Shop on Amazon? becomes an even more important question for users in India due to the tie-up between Amazon and Flipkart in the delivery sector. Recently Amazon has made the effort to deliver Flipkart's order in India.
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