Amazon to Focus on Logistics Expansion in India's e-Commerce Market

U.S. online portal Amazon has set up a logistics company in India to deliver products directly to consumers, in an attempt to expand market share in the country's fast-growing e-Commerce industry.

Amazon India’s Samuel Thomas
Amazon India’s Samuel Thomas

According to local media reports, the local subsidiary, Amazon Transportation Services Private Limited, will ship goods from sellers who transact on the company's online marketplace in India. The company will continue to work with other logistics companies, including India Post and courier firms such as Gati, Blue Dart and DHL.

"We want to change how India shops," said Samuel Thomas, director of transportation for Amazon in India and a former FedEx and DHL executive. "The logistics arm has been set up to assist in last-mile delivery as products can be shipped faster," he said. Products sold on the Amazon marketplace are now shipped to some 19,000 pin codes across the country.

Crucial last mile front
The company's Indian marketplace expects to sell goods worth over Rs 12,000 crore (U.S.$2 billion) this fiscal year, while experts predict that "last mile delivery" will increasingly be a crucial front in the battle for leadership in India's e-Commerce industry, which is expected to be worth U.S.$43 billion by 2018.

"All large marketplaces have opened their own last-mile logistics arms in India as the capability to deliver goods next day doesn't exist in India's logistics sector," Ankur Bisen, senior VP at retail consulting firm Technopak, was quoted as saying.

"Also, companies with logistics capability can deliver goods for competitors, creating a potential new line of business. "It makes sense to hive off (logistics divisions) or operate as separate arms as they may achieve a scale and reach their full potential by servicing other e-Commerce companies," Bisen added.

India’s e-Commerce market is thriving
Amazon currently operates nine e-Commerce warehouses in eight Indian states. The U.S. company was the first online marketplace to offer two-day and one-day guaranteed delivery in India, a norm in the U.S. market.
Meanwhile, UK-based consultancy Transport Intelligence said in a recent report that U.S. technology research company Gartner estimates that India’s e-Commerce market is expected to grow to $6bn in 2015, a 70% increase over 2014.

Another consultancy, Forrester Research has reported that in 2014, India’s e-Commerce market was worth $3.9bn, while e-Marketer notes retail e-Commerce sales reached $5.30bn in India during the year. For 2015, the market research company expects India’s retail e-Commerce sales, including all products ordered over the internet except travel, to grow by 45.2% to $7.69bn.

Nol van Fenema

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