Amazon Skates Where the Indian eCommerce Puck Is Going

What better time to trot out old hockey metaphors than the opening weeks of the NHL season? And while I’m no particular fanatic of the sport, I’ve always found much wisdom in Wayne (“The Great One”) Gretzky’s famous quip to an interviewer asking what made him an extraordinary player. “I skate where the puck’s going,” he said, “not where it’s been.”

Sage advice, no doubt, but it’s so often hard for managers of business to follow it. We are so mired in the day-to-day efforts to keep our machines churning that it seems impossible to poke our heads up and try to peer into the future; to do that vision thing where we imagine where that puck might be going and prepare for it.

But good businesses know to make time for it. The best ones marshal serious resources for it.

Take Amazon as a case in point. Its shares took a tumble in October when the company announced a loss in 2014’s second quarter. Why? Despite growing revenue, the juggernaut was accelerating its investments in further growth even faster. It was skating fast to where Jeff Bezos and crew think that puck is going.

That includes a recently announced investment of US$2 billion in India.

The Economic Times of India announced that Amazon is expanding its year-old pilot partnership with India Post, the country’s mail service, to get the postman to both deliver your Amazon package and collect your payment. (You can find the article here. ) Cash on delivery seems such an outdated concept to those of us most familiar with eCommerce practices in markets like the U.S. and the E.U. where consumers have long been comfortable offering their credit cards to pay for goods before they’re shipped.

But for many eCommerce related businesses, this is where the puck is. To get where it’s going, they’re going to have to spend time thinking how the future of the industry might look different than it does today and begin investing strategically.

While mature eCommerce markets will see growth rates begin to fall into single digits, developing markets (not just India, but think also: Russia, China, Brazil, Argentina and so many more) are poised for staggering expansion. That’s where the puck is going.

According to The Economic Times article, more than two-thirds of Indian eCommerce transactions occur on a cash-for-delivery basis. That means if you want to stake a claim on that growth, you have to adapt yourself to the eCommerce realities of these countries. The eCommerce winners in India will undoubtedly adapt to a culture that won’t pay etailers upfront with credit cards. They’re much more likely to pay the postman when the package gets delivered.

But change is hard. When you’re used to getting paid in advance, waiting for delivery (and all the uncertainty that comes with it) is no easy transition to accept. Kudos to Amazon for investing in the future of this enormous market.

Applying this lesson to GDC’s own universe, there’s no doubt that industry players of all sorts – retailers, fulfillment specialists, logistics companies, data services, alternative payment providers, etc. – must prepare themselves to ship goods (or their clients’ ) across borders. That’s where the growth will be… that’s where the puck is going.

How are you preparing yourself for the challenges that come attached to these growth opportunities?

By way of shameless plugs, GDC would love to help you think about using our network of the world’s best data providers to get you there. Call us to talk about it.

For eCommerce companies interested in cross-border trade, the Global Data Consortium’s Worldview platform gives you one place to access the world’s best data for Delivery, Identity and Payment.


Amazon Makes the Push into Alibaba’s Backyard

Amazon announced this past week that it would open a logistics warehouse in Shanghai’s Free Trade Zone that will allow it to expand the import and export of goods in China. Clearly this is a move to sharpen the competitive nature of things against its primary rival in Asia, Alibaba Group.

Amazon is moving quickly to become a player in the Chinese Cross Border Payment market. Further Amazon is increasing its ability to Deliver packages in China. Amazon current delivers to around 3,000 cities and counties in China.

Delivery, Identity and Payment are the three key underpinnings of global ecommerce transactions growth. Amazon is showing that it is capable of managing two of the three aspects via its platform in China.

Alibaba and others should be looking over their shoulder. Amazon is competing on all fronts and winning new customers in new markets.

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Cross Border Commerce Skirmish Continues in India

FlipKart recently raised $1 billion in capital to expand its e-commerce offering in India. Amazon then announced $2 billion of investment in India. Snapdeal which is the second largest e-commerce platform in India behind FlipKart is about to be surpassed by Amazon. Clearly the opportunity in Indian e-commerce segment is huge but why so much money and what are the challenges to growth?

If one reads the pundits Amazon’s dominance of the Indian e-commerce market is as inevitable as the waterflows of the river it is named after. The reason is Amazon can outspend any competitor in offering fast delivery and a broader catalogue of items. While neither FlipKart nor SnapDeal can directly compete with Amazon on those fronts they can compete with the behemoth in other ways.

The primary zones for Amazon’s fulfillment centers are focused on the large metropolitan cities. Amazon is concentrating its resources to deliver on the promise of fast delivery in these areas. Both FlipKart and SnapDeal should leverage their native capabilities and focus on selling to and securing the markets in the vast rural communities of India where there is a more even footing upon which to compete. For family members who live in a large city but wish to order items for family members in rural areas having an e-commerce platform that delivery to those communities would be a solid point of differentiation.

The other point of differentiation is with payment. India’s mobile commerce market is quickly developing its own ecosystem. Leveraging the preferred payment platforms versus the standard payment systems available on Amazon would also give Indian e-commerce vendors a solid point of differentiation in the market.

The founders of SnapDeal and FlipKart would do well to read Vikram Akula’s book “A Fistful of Rice”. His book speaks to the opportunity in India’s masses via the application of microfinance. Addressing the needs of the rural communities via e-commerce could yield a bounty of loyal and numerous customers that will help maintain the dominant market share over the long term.