A picture of the Amazon CEO Jeff Bezos went viral during his India visit this month. He delivered a package to a customer from kirana store in Mumbai.
Delivering the package was not a random act by Bezos. It gives a sneak peak into business strategy that amazon is betting on to take on rivals such as Walmart owned flip-kart and reliance e commerce venture JioMart by merging online and offline retail. Only 7% of the 1.2 trillion retail market is online and amazon is eyeing remaining 93 percent of the industry according to sources.
This month Bezos announced that the company planned to invest 1 billion dollar to help bring 10 million trade and MSMEs across India online enabling in 10 billion cumulative exports by 2025.
The people familiar with amazon's business strategy said that the company is looking at replicating the model of e commerce giant Alibaba.
It is about giving technology to small business to run the business, digitize them and create catalogues, One of the biggest challenges amazon is aiming to solve tap tier-3 and tier-4 cities and towns is last mile delivery. So they are going to work with these kirana stores and use them as delivery and pickup points and also use some space as warehouse.
Amazon is also going to invest a large chunk of the capital to build the supply chain for its grocery and food category. A big part of its strategy is its financial technology platform to rapidly enable transactions online for small business and even provide them access to capital. Amazon and Alibaba have generally avoided direct competition by dominating different parts of the world.
The two have taken different approaches to invest in India growing economy.. Regardless capturing market share and becoming profitable will require scale of business and vast amounts of capital. Amazon's present investment initiative is aimed exactly at this scaling up and it has realigned its strategy by trying to help India's SME's or kirana stores.
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