I analyze trends and current events in technology, marketing and AI.

On a recent visit with Amazon’s team in Bangalore, I made a fascinating

observation. In a two-hour conversation about the company’s strategy for
the Indian e-commerce market, not once did the team mention their
competitors. Instead, Amazon’s team spoke only of the value that they are
creating for consumers and sellers.

By thinking “from the customer backwards,” Amazon is positioning itself to

win in the hotly competitive e-commerce marketplace in India. Amazon’s
biggest U.S. e-commerce rival, Walmart, is reportedly near a deal to
acquire a majority stake in Flipkart, an Indian startup that has a growing
presence in the country’s e-commerce market. Last year, Flipkart
raised $1.4 billion in new funding from investors that included eBay,
Microsoft, and China’s Tencent. Meanwhile, Paytm Mall, India’s largest
payments platform, has received $110 million in additional funding from
SoftBank and Alibaba, the Chinese e-commerce giant.
Undeterred by its rivals’ ramp-up, Amazon has pledged continued
investment in India. Amazon has a $5 billion commitment to India,
declaring its intent to win in the second-biggest potential market after
being shut out of China by Alibaba Group and other local competitors.
Amazon founder and CEO Jeff Bezos has spoken enthusiastically about
India; after meeting with Prime Minister Narendra Modi, he tweeted:
“Always impressed, energized by optimism and invention in India. Excited
to keep investing and growing.”

The Indian e-commerce market is at an inflection point, thanks in large

part to the disruption of the telecom landscape, with dramatic reduction in
data rates and rapid adoption of 4-G smartphones and feature phones.
With a reliance on mobile technology and a need for more bandwidth,
networks in India have tested 5G capabilities that will be deployed by 2020.

The key to Amazon’s strategy in India is its ability to think globally but act
locally – leveraging its massive scale, logistics capabilities and balance
sheet while creating customized local offerings developed ground-up for
the Indian market. This “Glocal” strategy is in sharp contrast with other
U.S. companies such as ride-sharing startup Uber, which has rolled out its
U.S. business model internationally, only to encounter stiff competition
from nimble homegrown startups. This prompted Uber to change its
strategy in some markets such as China, retreating from major markets
while taking equity stakes in local competitors —a move I expect Uber to
make in India because of competition from Ola.

What’s needed, as Amazon shows, is a ground-up strategy tailored for the

local market.

Amazon’s 7 Strategies to Win in India

1. Deep customer understanding: Amazon has invested time,

energy, and resources to understand the nuances of India’s
consumer market. For example, Amazon realized that Indian
consumers are not comfortable buying online or they may lack the
education to read online product reviews. So it has established
kiosks in small local retail locations that set up entrepreneurs to
offer an “assisted buying” service for consumers.
2. Accommodating bandwidth challenges: Amazon realized that
over 500 million Indian consumers still use feature phones with
slow network connections. So it has designed a slimmed down
version of its app to adjust to slower network speeds. The modified
app still allows for a decent browsing experience, while
accommodating the reality of network constraints.
3. Using Artificial Intelligence to find addresses: Residential
addresses in India are often only best guestimates of location, which
makes delivery a challenge. Amazon is using machine learning and
artificial intelligence (AI) to bring better precision to delivery,
including a 0-to-100 confidence score for an address.
4. Ferreting out fake products and fraud. E-commerce in India
has been plagued by a plethora of fake reviews, which has made
buyers wary. Amazon is working to improve trust among buyers and
 sellers by combating fraud and fake reviews for third-party products
on its site, while promoting safer products. Amazon’s Indian team
has designed algorithms to detect fake reviews, fraudulent
transactions, and fake products.
5. Expanding logistics and fulfillment: Amazon is expanding its
network of fulfillment centers in India by five, raising the total to 67.
Amazon understands the importance of expanding its infrastructure
and delivery network to improve the customer experience and
enable tens of thousands of small and medium businesses to fulfill
orders more efficiently.
6. Onboarding assistance for third-party sellers: In addition to
carrying products from major sellers, such as Samsung with
promotions for the local market, Amazon is facilitating e-commerce
for smaller retailers that offer unique products. Amazon has created
an innovative initiative called “Tatkal” (which means
“instantaneous” in Hindi) to demonstrate how a small seller can be
ready to sell on Amazon’s site within 60 minutes. Amazon uses vans
that visit smaller retailers and suppliers. The vans have a photo
studio so Amazon employees can take pictures of products, catalog
them, and get sellers ready to sell.
7. Local R&D: Amazon’s largest R&D center outside of Seattle is in
Bangalore. This signals its commitment for the long haul to
understand the nuances of the market and to create user experience
innovations specifically for the Indian market.

Lessons for Global Expansion

Amazon’s strategy in India holds lessons for the e-commerce giant in other
markets, as well as for U.S. companies aiming to expand their international
reach. The key is to act “glocally” – combining global scale and resources
with a deep and granular understanding of each market, while empowering
the R&D and customer-service teams to tailor solutions and systematically
solve problems.

Given its increasing strength in India, I would expect Amazon to set its
sights on new global market opportunities such as Indonesia, which is the
most populous in the ASEAN region and has an estimated 88 million
middle-class consumers. In addition, its “act local” expansion strategy
could work well in Brazil, the Arab region, and Eastern Europe.

For now, the place to watch is India, where Amazon is in it to win it, despite
mounting competition.

CMO Network Newsletter

Expert CMO guests with the latest news about
marketing leadership and brand strategy.

Enter your email address Sign up

You may opt out any time. Terms and Conditions and Privacy Policy