Tuesday 5 April 2016

Amazon adds Rs. 8,000 crore to capital; modifies ad strategy to win customers

Amazon India has increased its authorised capital from Rs. 8,500 crores to Rs. 16,000 crores. The company is pushing hard to overtake its main rivals Flipkartand Snapdeal. Thanks to the new DIPP rule that states that a marketplace cannot influence its sellers’ prices, leading online marketplaces are looking at other means of profitability.
The fresh round of capital will be used to finance advertisements, hiring, and discounts, says the company’s filing with the Registrar of Companies (ROC).

Why the mad rush to get the top spot?

Amazon’s Jeff Bezos declared in 2014 that the company indented to put in $ 2 billion in its India operations. Bezos has been making good that promise in a phased manner over the past few years. The reason for all the attraction towards India is the predicted market growth. A UBS report observes that the ecommerce sale in the country is poised to hit $ 46 to 60 billion by 2020, and Amazon is keen to own the largest share of the pie.
The US based ecommerce giant is particularly keen on making up for its loss in China, where Alibaba is the undisputed leader. Amazon has also been giving tough competition to its local adversaries in India with its focus on discounts and quick delivery.

No more discounts. What next?

Amazon is now trying a different tack to lure and retain customers. The company is targeting Tier 2 and 3 cities with its thrust on convenience, easy returns and trust. Its recent ad campaigns are also focussed on introducing older shoppers to online shopping. Says Ambi Parameswaran, brand strategist and advisor at FCB Ulka Advertising, “It is time e-commerce brands started promoting brand and network in earnest.”
So online marketplaces are now looking at alternate means to bring in the moolah. It had better work, or companies will find themselves in trouble with their investors.

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