Source: LiveMint.com, Apr 06, 2017
Online marketplace Amazon India said it has opened seven new warehouses in a bid to boost sales of high-priced products such as televisions, refrigerators and furniture.
The new warehouses and two already existing ones will be used exclusively for large appliances and furniture—categories that require online retailers to build an independent logistics network, unlike the one they use to deliver smaller products such as books, mobile phones and clothes.
Amazon India (Amazon Seller Services Pvt. Ltd) now has as many as 34 warehouses across 10 states, far higher than arch-rival Flipkart.
To boost sales in the category, Amazon is offering product exchange schemes and a no-cost EMI service. The firm is also increasing its product assortment and signing up exclusive tie-ups with brands.
With the new warehouses, Amazon will now deliver large appliances and furniture to more than 150 cities and offer next-day delivery in 20 cities, said Akhil Saxena, vice-president, India Customer Fulfilment at Amazon India.
Amazon’s expansion in large appliances will pit the company squarely against Flipkart, which established an early lead in this category.
Flipkart boasts an independent supply chain for this business as well as an ownership in Jeeves Consumer Services Pvt. Ltd, an after-sales services provider. Product installation is as important as timely delivery in the case of large appliances.
“Our belief has always been that don’t expose customers to a half-baked product. When we started selling large appliances and furniture, we got the feedback that some brands weren’t doing justice. We realized that if we want to sell all types and sizes of products in this category, we shouldn’t do it with existing supply chain,” said Manish Tiwary, vice-president, category management at Amazon India.
Large appliances account for less than 10% of all online retail in India, but both Amazon and Flipkart believe the category is ripe for rapid expansion.
Amazon has seen an increase of nearly 200% in gross sales of large appliances over the past year, Tiwary said.
“It’s a massive market and the penetration is very low. The offline experience in large appliances is broken. We believe the potential for consumers to upgrade is very high. What large appliances do for us is that with customers who make this high-value purchase with us, the life time value of the customer will be massive. The next time the customer wants to upgrade, they come back,” Tiwary said.
Apart from the new warehouses, Amazon is also expanding its after-sales service network for large appliances. The company will now offer installation services directly as well as connect customers with brands.
“If brands do not service some cities, we will take the onus to do it. If the brand experience in installation is broken, again we will step in,” Tiwary said.