In 1995, Amazon.com started in the US as an online book store. Eighteen years later the world’s largest e-commerce retailer has entered the Indian market with Amazon.in, an online marketplace that offers books and movies offering up to 25 to 30 % discount on products and the option of paying by cash on delivery. To begin with, Amazon.in will sell some 7 million book titles available for purchase and nearly 13,000 movie titles and the online retailer plans to expand into other categories such as cameras and phones in the near future.
In the current model, Amazon.in does not own any of the merchandise that is sold through the website but merely acts as an aggregator to all the retailers who wish to exhibit their products on the website. In Amazon's US website, there are both Amazon-owned goods and third-party products being sold. The marketplace model helps Amazon stay out of FDI-in-retail ruling that is applicable to single and multi-brand retailers and that prohibits online retail to companies with FDI.
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Apart from inviting retail sellers to exhibit their products on the website, Amazon India has an option called Fulfillment by Amazon wherein it would provide end-to-end logistics solutions to retailers who wish to avail of this service. Amazon has started off by setting up a fulfillment center on the outskirts of Mumbai from where merchandise is stored and delivered, using Amazon's own personnel as well as third-party couriers. The company claims to make it easy for sellers by offering to do the heavy lifting for them. Issues related to packaging, taxation, are taken care of by the company. The vendors pay for storage space per cubic feet and a 1% referral fee. This relates to huge savings for the seller, which can be passed on to making the products cheaper for the user. The company charges on a pay-as-you-go basis, which means the vendor pay on the units sold.
Amazon.in will face competition from Indian retailers like e-bay, Flipkart, Snapdeal, Homeshop18. While eBay is a foreign-owned company, both Flipkart and Snapdeal are funded by global private equity companies. Amazon India is already operating Junglee.com, a price-comparison portal launched in February last year. Instead of selling products on its web page, Junglee.com sends visitors to the website of the seller.
The company has been actively lobbying with the government of India to relax the regulations against foreign e-commerce companies and allow foreign direct investment in online retail. Global vice-president Paul E Misener met India's commerce and industry minister Anand Sharma in February to discuss the issue.
Amazon in India is headed by Amit Agarwal. A computer science graduate from IIT and Stanford University, Amit has been with Amazon since 1999. He was Managing Director of the Amazon.com development Center in Bangalore from 2004 to 2007 and Advisor, Office of the CEO between 2007 and 2009. He took over his current position as Country Manager in Sept. 2009.