MUMBAI: Amazon operates the second-largest e-commerce site in India, but the country is important in another respect because it is a source of cheap, but high quality, products that can be sold to US consumers on its American site.
American shoppers this holiday season may be unaware of the extent to which Amazon partners with Indian companies, but The New York Times reports that at least 27,000 Indian vendors have signed up to Amazon’s outreach initiative since it began two years ago.
The arrangement appears to benefit all those concerned, with US consumers gaining access to quality discount goods, especially in the apparel category, while Indian brands access the more lucrative US market in addition to Amazon’s knowhow about distribution, marketing and other services.
“Amazon handles everything in the US from shipping to customer handling, so we can focus on making the best quality products and adding more products to our catalogue,” said Abhishek Middha, founder of The Boho Street, a fashion and lifestyle brand.
As for Amazon, the advantage goes beyond simply extending its range of discount goods as it vies for market share with the likes of Walmart.
The 75m products sourced from India on its main website enables the company to appeal to Americans of Indian heritage, but Amazon also makes money by charging Indian third-party sellers for the use of its services.
“They make more money on their third-party stuff than on the stuff they sell themselves,” said Aaron Cheris, Head of Americas Retail at Bain & Company, the management consultancy.
According to The New York Times report, a vendor who opts for the full range of Amazon services – including storage, distribution and advertising – typically agrees to let Amazon keep about one-third of an item’s sale price in fees and commission.
And with the Indian government strongly pushing Indian exports through the Make in India and other initiatives, Amazon’s active promotion of Indian goods also does it no harm when it comes to its corporate image.
Sourced from New York Times; additional content by WARC staff