Q&A | Amazon bets on Indian railways and post to take products from Haryana to Houston
KV Prasad Jun 13, 2022, 06:35 AM IST (Published)
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Summary
As Amazon celebrates a decade since it made its debut in India, Amit Agarwal, Senior Vice President – India & Emerging Markets at Amazon, sat down with CNBC-TV18 for a freewheeling chat.
Amazon India has tied up with the Indian Railways and India Post in a move to expand Indian sellers’ reach. Amazon India said this will help optimise its expansive network, thereby curtailing costs, while concurrently furnishing sellers with a swift and widespread delivery conduit for customers across the nation, and even overseas.
As Amazon celebrates a decade since it made its debut in India, Amit Agarwal, Senior Vice President – India & Emerging Markets at Amazon, sat down with CNBC-TV18 for a freewheeling chat.
Edited excerpts:
Q: You will now be engaging with Indian railways, postal services — give us a sense of what this will translate into, how this will roll out over the next few quarters?
A: We care about the three things that customers care about most, which is how we add more selection, reduce the cost of operations for our sellers so that they can offer great value, and help them ship items fast and reliably. Over the years, if you look at all our innovations, they have all been, in some ways, trying to drive these three things.
We started a while back helping our sellers with logistics solutions that pick up items from their location, even convert their own locations into warehouses and ship products, both nationally and globally. We have pledged to digitise 10 million SMEs, enable $20 billion in exports, and create two million jobs in India.
So our announcements that we have made today are geared toward that.
So imagine a small business in a corner of the country wishing to sell a product to customers sitting in New York, and what are the capabilities that they need. Keeping that in mind, our first announcement is an MoU with the Indian postal service that builds an integrated, seamless cross-border logistics solution that would allow this particular small business anywhere in India to sell globally.
India has been trying to use DFCs, or dedicated freight corridors, to move goods. We are the first e-commerce company that is partnering with Indian Railways to take advantage of that, and that also allows Indian Railways to leverage its network, reduce its costs, and provide a service to our sellers so that they can move items to customers anywhere nationally, fast. They can also move their items to a port where the Indian postal service takes over and the products then move through customs clearance out of the country. So that’s a big deal for them.
The third piece is what we call multi-channel fulfilment. As many of our sellers get digitised, they would have operations on Amazon, off Amazon and they would love a solution so that their inventory and fulfilment are in one place; they don’t have to make the choices of where they sell. We are offering them our inventory fulfilment supply chain solutions so that they can run it in one place.
And sitting on top of all this is the generative AI that has captured our minds in recent times. We have to be the first company in India to offer our small-medium businesses the power of generative AI. This solution, called ‘SahAI’ includes everything from allowing them to list their items, simply upload images of the products and tease out the attributes of the product. They don’t have to be fluent in the language to describe the product that they have. This generative AI solution will offer assistance on business trends, listing an item, supporting their customers, and everything else that they need to know.
A small seller sitting in one corner of the country is completely empowered with world-class logistics, and world-class AI capabilities to serve a customer sitting in New York.
Q: Talking about how the Indian market is positioned for you, you said it’s an exciting market. There are a lot of resources that Amazon is committing to this. In the near term, this is a situation not just unique to India — we see a situation of high inflation and high interest rates. We are on the cusp of the festive season. Do you think that this festive season, the next few months, will bring the mojo back in terms of stimulation of demand?
A: So you are right, I think it is not just Amazon, pretty much every retailer and business has had a challenging time over the last two to three years. With the pandemic causing each one of us to re-evaluate our models. Thankfully, we are not in a business like a restaurant business or offline business that was disrupted and had to be brought back. But we had to negotiate a high-growth phase with people working from home. And then obviously, as that happens, you try to figure out how to then stabilise in this new normal.
The world has seen higher inflation, and as the world has come back, countries have tried to get the cost structures back and this has impacted every single company. Now, the beauty of our model that focuses on offering a great selection, great value and fast delivery is that these three things are important, no matter what the macro-condition is. So if you look at our results in 2023, we have been very excited by the momentum we are seeing in a global business and that is true in all our emerging markets, including India.
So as we get into our holiday season, we just had Prime Day recently, which was the largest Prime Day ever. So if that’s an indication, I think customers are very excited about coming to Amazon, getting access to a great selection, great value and fast delivery and we are prepared for the upcoming Diwali season. We are super optimistic about it.
Q: Ten years in India — how far away is Amazon from turning profitable?
A: First of all, I think we should realise trying to build a service that provides the kind of convenience that we provide required us to build everything from the ground up. So if you go back 10 years, when Amazon started, there was no notion of next-day delivery. Amazon was a pioneer in that, and then building the entire infrastructure from logistics to fulfilment to payments to bringing sellers online — it is like the construction of an entire infrastructure of super highways.
That was an important investment to make precisely for the kind of business we are running today, where Amazon is recognised as ‘India’s apni dukaan’. Now having said that, we are running a business. And we have very clear timelines and milestones in mind that we want to hit every year and I can tell you that we are on track.
Q: We already have the Data Privacy Act now, we are looking at a Digital India Act, at digital competition, at an e-commerce policy; there’s a telecom bill in the works. The law is trying to catch up with technology, but in trying to do that, is there a fear that perhaps we may end up overregulating? That’s a concern that some stakeholders have expressed in the past. Is that a fear that you have?
A: I think whenever we have new technologies, there would be this tension of, regulations catching up with technology, I think pretty much every geography that we operate in has its unique flavours of regulation and our job as a company is to make sure that we comply with the regulations, and that within that framework, we are doing everything to make sure we offer a great customer experience. And that is what we do in India as well. So I think, while we pay attention to what the regulations are, and how they would impact us, the team is laser-focused on adding more selection, offering greater value to our customers and making deliveries faster and speedier.
Now, having said that it is also important to recognise that e-commerce in India is very, very early and very small. It is in a low-single digit and there is a lot of growth, a lot of innovation ahead of us. So my take is that we must be more careful and not overregulate the sector. You need to have policies that allow small and medium businesses to remove friction from their growth.
If a business wants to open up and ship from across India, what is the friction involved there? They want to take their products and ship globally, what’s the friction involved? I think there are a lot of opportunities that we have where regulations can make all of these easier, and be more enabling to the customer experience and the seller experience.
Finally, I think you need a certain degree of stability and continuity. So that, investments that are needed for India to be a trillion-dollar digital economy have long-term stability and continuity.
Q: We read reports that (Amazon CEO) Andy Jassy said that perhaps it’s time for Amazon employees to come back to work. So on a lighter note, is the romance with hybrid working and work-from-home over now? And that perhaps it’s time to clock in the hours, be back in the office in the downtown area. Is that the way forward now?
A: Well, we haven’t changed our viewpoint on this. I mean we genuinely believe that culture is a big reason why over the last 27 years, Amazon as a company has thrived. And culture is what brings people together with a purpose. You can learn it, model it, practise it, and strengthen it when you are with your colleagues in an office and so, we have maintained our viewpoint on a hybrid environment. But the people are coming three days to the office and so we haven’t made any changes.
Q. On a personal note, how would you rather do it, would you clock in? Do you like that more?
A: I love to interact with people, and to be able to discuss ideas on a whiteboard. There’s so much innovation that happens in your conversations when you are one-on-one with people. But it is also true that the pandemic has opened us to possibilities of certain kinds of roles in certain kinds of jobs to be done virtually. So as I said, we haven’t made a change to any of our policies — we think a hybrid environment where people can benefit from both, from the flexibility of being virtual but also from in-person interactions that that bring the culture alive, that environment works best.
Q: Any magic management mantra that you have either taken from here, the Indian market to the wider EM space, or from the EM space back here?
A: Just hire great people.
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