Amazon India has planned to open 12 offline stores in three Indian cities. The ecommerce major has made this move to facilitate its upcoming sale event.
The company will open these offline stores in the Bengaluru, NCR, and Mumbai tech parks. The company has termed it as an ‘end of season fashion sale’ from June 23 to June 25, 2017. “Amazon will offer 50-80% discount on 3 Lakh units across 1,500 brands, apart from lots of goodies as gifts and cashback,” stated ET.
Reportedly, with this sale, Amazon India aims to help sellers sell the majority of their stock before GST strikes next month.
The GST will roll out from July 1, 2017 and, with it, the taxation structure and prices will change. Therefore, sellers are trying to offload maximum stock taxed on the basis of VAT and sales tax. Earlier this week, reports also surfaced that Amazon India has suspended its platinum seller program due to GST.
“The sellers and brands might benefit if they could sell most of the old stocks before GST begins,” Arun Sirdeshmukh, Head of Amazon India’s fashion business told ET.
An email sent to Amazon India did not elicit a response at the time of publication.
Amazon India Vs Flipkart Fashion Sale
Fashion Sale Strategies
With the concept of physical stores, Amazon India intends to woo consumers, as its nemesis Flipkart is conducting online fashion sales aggressively. As stated by Arun to ET, “Around a third of customers try fashion first on Amazon India. We are hopeful the event will bring in new consumers online.”
Flipkart, on the other hand is organising the fashion sale events together with its umbrella brands – Myntra and Jabong – for the first time.
Flipkart will be offering 50% to 80% off covering 3,000+ brands. 99.99% of the styles on Flipkart Fashion will be on discount during the three-day fashion fiesta from 24 to 26 June.
Flipkart will also be running insight-driven deals for different shopper segments. For instance, the company has launched the sale event with new constructs with an aim to lure and engage shoppers on the platform. The sale has multiple sub-events including Late Night/Early Morning Shows, Fashion Tribes, The Big Fashion Loot, The Matchmaker, Lucky Size Store, and more.
Flipkart has also invested in its algorithm to better identify elusive shopper segments like parents, luxury shoppers, etc. It will have targeted and exclusive offers for these segments.
Amazon India recently announced that it has doubled its seller base and reached the 2 Lakh sellers mark on its platform in June 2017. In March 2017, in a bid to help sellers to understand the GST better, Amazon India came up with a programme called the ‘A-Z GST Guide’ for sellers. The guide will further help sellers with the flexibility of accessing in-person assistance from Seller Cafes, present in more than 30 cities in the country.
In April 2017, Amazon CEO Jeff Bezos said that Amazon India is the most popular marketplace indicating the company’s intention to keep fuelling in Indian investment. In May 2017, Amazon India also announced seven new fulfilment centers.
Flipkart, on the other hand, is busy getting the stock out before GST for its sellers. Since, the start of the year, Flipkart has organised category sales almost every month. On the GST front, the company has committed its sellers to provide free tax structure guidance and assistance in customer invoicing, in February 2017. Also, with its newly acquired eBay business, Flipkart has already closed down its global seller sourcing platform, Flipkart Global.
The Private Label Game
Flipkart has also recently launched its fashion private label Divastri – an ethnic wear line for women based on Flipkart Fashion shopper trends. Myntra and Jabong together hold 45% market share in the fashion vertical. While combined with Flipkart – their share in the fashion segment is pegged at 75%.
Amazon India also has an in-house private fashion label, ethnic wear brand for women named Myx which it launched in December 2016. Prior to it, the company had launched Symbol, a men’s private fashion label in January last year.
As per an IBEF report, Indian ecommerce sales are expected to reach $120 Bn by 2020 from $30 Bn in FY 2016. Furthermore, India’s ecommerce market is expected to reach $ 220 Bn in terms of gross merchandise value (GMV) and 530 Mn shoppers by 2025.
While Flipkart is banking upon the recent $1.4 Bn funding by Tencent, eBay and Microsoft, rivals Amazon India and Paytm (backed by Alibaba) are playing on their huge war chests. Indian ecommerce is currently going through a tectonic shift, forcing the existing players to change their ways. Flipkart has already gained an edge here as it is planning to launch a one-stop mobile app much like Google Areo. On the other hand, Paytm Ecommerce is riding upon the digital payments bandwagon with Paytm Payments Bank, along with Alibaba and SoftBank support.
Amazon India, to date, has been focussed purely on online ecommerce in India but is gaining pace to take a larger share of digital payments through Amazon Pay. Also, the current attempt to launch offline stores (even for fashion sale) raise questions around its entry in O2O commerce. Will these fashion sale events help these players in raising the leadership flag, only time will tell.
(The development was reported by TOI.)