Amazon’s Next Move To Expand E-Commerce In India : “Sell As Individual”

by Trefis Team
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India is undoubtedly a key market for Amazon (NASDAQ:AMZN) and the company is leaving no stone unturned to capture the e-commerce growth in the region. Recently, Amazon launched a pilot “Sell As Individual” program in Bangalore, India which allows users to sell their used goods on its platform. The company will handle the packaging and delivery of the product at a small cost. The used goods market is growing at a rapid pace in India and the potential market opportunity is being pegged at $25 billion by 2020.  Several players such as OLX, Quikr and eBay are already tapping into this market. However, with its vast logistics network and reliability, Amazon can get a competitive edge in this segment. Furthermore, if the pilot is successful in India, the company might look at expanding it globally in the long term, expanding its e-commerce reach.

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Building A Strong User Base

Providing a platform to buy and sell used goods can enable Amazon to attract more users to its e-commerce platform who can then be converted into loyal customers of its retail platform. Consumers from tier II and tier III cities in India look for used products as value deals and the “Sell As Individual” initiative can attract these individuals to Amazon. While this market appears to be crowded, Amazon’s deep pockets and high investments in India should ensure that it can attract large number of users to its platform. Players such as OLX and Quikr, firms that dominate this segment, have seen significant growth in the number of users over the past two years. While OLX operates as a classifieds platform for used goods, Amazon will follow a marketplace model, assisting in packaging and delivery. We believe this service should attract more users since it takes care of the hassle of delivering products once sold. This is Amazon’s second attempt to enter the used goods market in India. However, with enough experience in the region this time around, its chances of success are higher. In July last year, Amazon became the top e-commerce player in the country, beating local player Flipkart, which had been dominating the market for a long time. Amazon Prime was introduced in India late last year, along with Prime Video, which is focused on local content.

India is a high growth market for Amazon and the company is taking steps to become ubiquitous in the region. The used goods market is likely to see high growth in the next few years and Amazon can build a large user base through its entry into this segment. This can be a potentially disruptive move if the company expands this initiative globally.

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