Where is Amazon India investing its $1 billion? Gopal Pillai has some details

NEW DELHI: A sum of $1 billion in investment has suddenly become the contentious talking point this week and at the center of it the question on where this investment would be used. To cover for the losses Amazon is suffering in India, or as the company says, to digitally empower SMEs. One of Amazon India’s top executives provides some details.

Exports will be a big priority for ecommerce major Amazon with the etailer enabling $10 billion in cumulative exports by Indian businesses selling on Amazon worldwide by 2025. A concerted focus will also be on cluster development approach which will identify the strengths and expertise based on the specific cluster.

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“What we are doing is we are going to manufacture incubated zones. For instance, there is Meerut, which is famous for something and you have the Tirupur, Coimbatore belt, which is famous for apparel and T shirts,” says Gopal Pillai, VP - seller services, Amazon India. According to Pillai, the ecommerce platform would be looking to create and discuss opportunities and get sellers who are successful to start talking about it with others – a word-of-mouth onboarding strategy. “So we are going cluster by cluster. That is some of the investment out of the $1 billion,” Pillai said while speaking on the sidelines of the Amazon Smbhav event for SMBs in the capital on Wednesday.

Amazon founder Jeff Bezos announced an investment of $1 billion to digitise SMBs amid the recent controversies that the player finds itself embroiled in. Commerce and industry minister Piyush Goyal created a flutter when he said Amazon is not doing any favour by planning to invest a further $1 billion in India. Goyal added that it was surprising that a marketplace model like Amazon was incurring heavy losses, and wondered if it was because of deep discounts it provides. “They may have put in a billion dollars, but if they make a loss of a billion dollars every year, then jolly well they have to finance that billion dollars. So, it’s not as if they are doing a great favour to India when they invest a billion dollars," Goyal said. On Friday Goyal clarified that his statement was misconstrued and the government does not have a problem with investments within the current rules and regulations for the sector.

Reiterating Bezos’ commitment, Pillai said that when things work well, one doesn’t want to ration it. “Things are working well, so you want to double down because you are seeing success. Because if you don't, then you will be successful in the short term, but not in the long term,” Pillai said.

Going forward, the brand has plans to establish Digital Haats in 100 cities, villages, and communities to enable businesses to integrate into the digital economy. “Digital haat is an idea born out of the cluster development activities. In this case, it will be a permanent space. People can walk in and get the service as needed. It will create small ecommerce hubs in each part of the country so that they become self-sufficient to reach global marketplaces. These initiatives will bring more than 10 million SMBs to the digital economy. Digitisation will not be a barrier,” he added.

The Digital Haats will provide services like e-commerce onboarding, imaging and cataloging, warehouse space, logistics, digital marketing, and compliance. They will be in the local neighbourhoods and will be available to all MSMEs.

Pillai also drew attention to the interplay between online and offline that has seen a radical change over time with unique seller success stories. “Ecommerce is already creating a level playing field. Amazon opened up doors for many players and once these brands became popular online, offline stores also started accepting them. So earlier, it was brands becoming popular offline and then going online. Now the reverse trend is happening where brands do well online first and then move offline. So it is a hybrid model,” he stated.

With more than 5.5 lakh sellers on the Amazon India marketplace, Pillai said that India is a strategic priority for Amazon and they want to double down on the programmes.

The ecommerce giant hosted its first such event for SMBs, Amazon Smbhav, with more than 3000 businesses, traders, startups and technology solution companies in attendance. Designed to help MSMEs with the necessary wherewithal to grow nationally and internationally, the event saw a huge turnout in the capital.