Amazon to extend financial aid to sellers; plans global delivery network to compete with Alibaba

“Sellers form the backbone of our business,” asserted Rohit Kulkarni, Senior Manager – New initiatives, Amazon India. And to keep its spine healthy and happy, the online marketplace is planning to offer loans to its sellers.

Working capital loans to earn sellers’ loyalty

Retaining top-sellers is high on the priority list of all ecommerce biggies. And offeringfinancial assistance is one way to stop sellers from migrating to other platforms.

Amazon had declared their plan to offer loans to sellers in India in June last year. Soon after in September, they launched the pilot finance program by collaborating with third-party seller financing platform, Capital First.

This time the ecommerce leader will provide short-term working capital loans to selected sellers. The objective is to assist merchants in stocking inventory and expanding their business.

Key features of this service are:

By-Invitation-Only loan program

A credit rating mechanism will determine loan-worthiness of sellers

Collateral free loans at low interest rates

Loans range from Rs 5 lakh to Rs 2 crore

Interest rate 13-15% for a period of 4-6 months

Gopal Pillai, Director & GM, Seller Services, Amazon India said, “Access to working capital is the biggest hurdle for sellers. With this we are minimising the fiction and barriers for the sellers to get loans and helping them focus on growing their business on our platform”.

Amazon designs ‘Dragon Boat’ to compete with Alibaba

While the above loan initiative will help Amazon to deal with national competitors, the American etailer also has to worry about international competitors. The rivalry between Alibaba and Amazon is legendary. India being their latest battleground, both the companies are trying hard to overtake each other.

Alibaba’s trick is to support Indian etailers like Paytm, Snapdeal and Flipkart and weaken Amazon’s position in India.

Now Amazon has launched ‘Dragon Boat’ project to compete with Alibaba at a global level. The project is rumoured to be a global shipping and logistics network, which will help to reduce the gap between sellers in China & India and buyers across US & Europe.

As cross-border ecommerce is growing, Amazon wants to build a strong logistics & delivery network spread across the world, which will help them to fight against Alibaba that also wants the coveted Global Ecommerce Leader Tag.

“The new business will locate Amazon at the center of a logistics industry that involves not just shippers like FedEx and UPS but also legions of middlemen who handle cargo and paperwork associated with transnational trade. Amazon wants to bypass these brokers, amassing inventory from thousands of merchants around the world and then buying space on trucks, planes and ships at reduced rates. Merchants will be able to book cargo space online or via mobile devices, creating what Amazon described as a “one click-ship for seamless international trade and shipping,” stated a Bloomberg report.

Government strongly considers 100% FDI in ecommerce; closer to Marketplace definition

The government is considering permitting 100% foreign direct investment (FDI) in the marketplace format of e-commerce retailing with a view to attract more foreign investments.

The norms on FDI in the sectors of e-commerce, and IT and ITeS are expected to be part of detailed guidelines, which would be rolled out soon by the government, sources said.

Last week, a group of senior officials from departments of DIPP, corporate affairs and economic affairs, among others, discussed these matters in great detail. According to sources, the DIPP has suggested that 100% FDI should be allowed in “marketplace model e-commerce” activities. In such a model, the e-commerce company provides an online platform for buyers and a sellers.

At present, global e-tailer giants such as Amazon and Ebay are operating online marketplaces in India while homegrown players such as Flipkart and Snapdealhave foreign investments even as there are no clear FDI guidelines on various online retail models.

An e-commerce firm carry its business either through marketplace model or inventory based model. In the inventory based model, a company owns and keeps the goods in warehouses.

The officials also deliberated upon the definition of “e-commerce”. It may broadly cover transactions between buyer and seller through electronic mode like internet, mobile and televisions.

The Department of Industrial Policy and Promotion (DIPP) is working on guidelines for e-commerce sector in the backdrop of ongoing tussle between online and offline retailers. The department has already carried out stakeholders consultations with states, e-commerce companies and other departments.

At present, 100% FDI is allowed only in business-to-business (B2B) e-commerce and not in the retail segment.

Amazon raises the stakes; pumps Rs. 1,980 crores into India

In keeping with Jeff Bezos’ promise to invest in India, Amazon has added Rs. 1,980 crores to its Indian arm. The cash-rich company put in Rs. 1,696 crores in Amazon India in December 2015.

Big Money! Big Results!

Amazon has been trying to maintain traction in the Indian ecommerce market since it entered the scene in 2013. Its main contenders have been the home grown companies Flipkart and Snapdeal.

Active seller base boosts inflow of funds to India

Amazon has found great incentive from its increasing seller base, which has encouraged the company to pump in funds in multiple rounds.

“We’re really encouraged with what we are seeing, both on the customer side and the seller side,” said senior Vice President and CFO, Brian Olsavsky, “About 90 per cent of our sellers are using our logistics and warehouse services. And as a result, we’ve tripled our fulfilment capacity year-over-year.”

The company has spent a large chunk of its funds in creating fulfilment centres and warehouses.

As Olsavsky says, “India is a different market and does not have a lot of the same ready fulfilment options that some other countries did. We see that as an opportunity.”

The fact that Amazon has access to heavy funds might cause alarm to local players like Flipkart, who is having a tough time in matching the kind of moolah that the US based Amazon is able to stack up.

Reports suggest that Alibaba would like to acquire stakes in Flipkart and Snapdeal, but is finding it too costly.

Snapdeal introduces new product listing feature on Seller Panel

Snapdeal sellers can soon say goodbye to emails for listing products as Snapdealhas introduced a new feature that allows you to directly list your products on the Seller Panel. The new procedure has been implemented to speed up the process, instead of using tedious emails. A demo video is available once you log on to the Snapdeal Seller Panel.

Steps to list products through your panel:

1. Log into your panel and go to the catalog tab on the left navigation panel
2. Click on ”Add Product’ tab on the right corner
3. Get started with new listings

“We urge you to route all your listing requests through Seller Panel instead of writing a mail,” stated an email from Snapdeal.

Sellers this process is still in its infancy, so let us know how is its usability. Are there any obstacles or is it smooth sailing?

Flipkart introduces Gourmet Food & Nutrition category

Last April, Flipkart announced plans to create an in-house grocery category and In October it launched the Flipkart Nearby mobile app, in Bangalore. Flipkart has now introduced a gourmet food and nutrition category on its website.

The most stocked segment is Health & Nutrition with 1,261 products already listed, while Bakery and Baking Essentials has only 5 products listed so far. The products are refined by brand, food preference, price, added preservatives, dietary preference and off-course discounts.

Gourmet & Speciality shop:

• Coffee & Tea
• Chocolates & Candy
• Oils & Vinegar
• Snacks
• Pasta & Noodles
• Sauces

Health & Nutrition shop:

• Dry Fruits
• Protein Supplements
• Vitamin Supplements
• Organic
• Edible Seeds
• Oats

We have recently witnessed the rise of exclusive grocery launches, for example when Snapdeal re-launched Maggi noodles. Promoting Impulse shopping in online grocery is another tactic slowly taking off. We expect Flipkart to take advantage of these trends as it looks to break into the grocery segment and compete with the likes of BigBasket, Godrej Nature’s Basket and Reliance Fresh. Mind you, Peppertap and Grofers have shut down operations in a number of big cities recently, so we await to see Flipkart’s long term strategy.

Are you an online grocery seller? What has been your experience with online marketplaces so far?