AmazonBusiness is planning to expand to new cities in the coming year for a larger share of the business-to-business retail. From an 8-pin code pilot in Bengaluru, started a year back, Amazon-Business in India continues to be a work-in-progress compared to its US market where it clocked in $1 billion in annual sales last year.
Part of the cautious approach is to do with the tax structure in the country. “In business-to-consumer Business, you can have presence in one part of the country while serving the rest. In case of business-to business transactions, it is a state specific business. Tax rates are different in different parts of the country and we have to have our fulfilment centre in whichever new state we get into,” said Kaveesh Chawla, General manager of AmazonBusiness, adding that the market is underserved as 90% of the trade happens through the mom-and-pop stores which source products from traditional distributor network.
This and other India-specific issues have helped AmazonBusiness tweak its model for the Indian momand-pop stores as well as pharamacy, gas stations and offices which order from the portal.
“Cash on Demand, which we launched in December, is massive and constitutes the majority of the order. We have also created a closed loop credit card for small retailers in partnership with banks as well as payment through NEFT/RTGS for transfer of money on to our account directly, within two days of order generation,” said Chawla, adding that the platform works with 10,000 retailers in Bengaluru alone.
He said that the network can be opened up for incremental services such as credit services from financial institutions. “For brands like Coolpad, Motorola we are the distributors in the absence of an offline distributor channel. New brands are looking at other channels of sale such as supermarkets,” said Chawla, adding that AmazonBusiness currently works with over 300-plus brands in India, dominated by FMCGs such as Dabur, Patanjali, as well as Indian brands like Emami and CavinKare, home and kitchen utilities and devices, babycare, personal care and health and electronics.
A lot of the brand tie-ups also provide cooperative advertising revenue to the AmazonBusiness vertical, though Chawla refused to comment on the share of this stream. “Most of the brands have trade promotion and co-op advertising budgets.”
Source: The Economic Times
